DuPont Decomposition
Why does BIRLAMONEY earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
31.4% = 18.2% × 0.16 × 10.46
Latest: FY2025
Profitability
Net Margin
18.2%
11.2% →18.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.16x
0.05x →0.16x
Revenue per ₹ of assets
Leverage
Equity Multiplier
10.46x
12.49x →10.46x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 24.7 pp over 3 years. Driven by net margin improving (11.2% → 18.2%), asset turnover improving (0.05x → 0.16x), leverage falling (12.49x → 10.46x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 11.2% | 0.05 | 12.49 | 6.8% |
| FY2024 | ₹0Cr | ₹0Cr | 14.4% | 0.05 | 13.01 | 10.1% |
| FY2025 | ₹0Cr | ₹0Cr | 18.2% | 0.16 | 10.46 | 31.4% |
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.