DuPont Decomposition
Why does BASF earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
13.2% = 3.1% × 1.80 × 2.33
Latest: FY2025
Profitability
Net Margin
3.1%
2.5% →3.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.80x
0.50x →1.80x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.33x
2.43x →2.33x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 10.1 pp over 3 years. Driven by asset turnover improving (0.50x → 1.80x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 2.5% | 0.50 | 2.43 | 3.0% |
| FY2024 | ₹0Cr | ₹0Cr | 4.8% | 0.46 | 2.24 | 5.0% |
| FY2025 | ₹0Cr | ₹0Cr | 3.1% | 1.80 | 2.33 | 13.2% |
How to read DuPont
- • Rising ROE from margin = pricing power, operational improvement (good)
- • Rising ROE from turnover = better asset utilization (good)
- • Rising ROE from leverage = more debt, amplified risk (caution)
- • Falling ROE across all three = structural deterioration (red flag)
DuPont decomposition from audited annual financials. Factual analysis, not investment advice.