DuPont Decomposition
Why does BSL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
6.8% = 1.2% × 1.05 × 5.26
Latest: FY2025
Profitability
Net Margin
1.2%
3.6% →1.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.05x
0.88x →1.05x
Revenue per ₹ of assets
Leverage
Equity Multiplier
5.26x
5.17x →5.26x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 9.4 pp over 3 years. Driven by net margin declining (3.6% → 1.2%), asset turnover improving (0.88x → 1.05x). 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 | 3.6% | 0.88 | 5.17 | 16.3% |
| FY2024 | ₹0Cr | ₹0Cr | 1.7% | 1.08 | 5.48 | 10.0% |
| FY2025 | ₹0Cr | ₹0Cr | 1.2% | 1.05 | 5.26 | 6.8% |
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.