DuPont Decomposition
Why does CERA earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
18.0% = 13.1% × 1.01 × 1.36
Latest: FY2025
Profitability
Net Margin
13.1%
11.9% →13.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.01x
0.32x →1.01x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.36x
1.43x →1.36x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 12.6 pp over 3 years. Driven by net margin improving (11.9% → 13.1%), asset turnover improving (0.32x → 1.01x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 11.9% | 0.32 | 1.43 | 5.4% |
| FY2024 | ₹0Cr | ₹0Cr | 13.8% | 0.30 | 1.37 | 5.6% |
| FY2025 | ₹0Cr | ₹0Cr | 13.1% | 1.01 | 1.36 | 18.0% |
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.