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
13.9% = 10.0% × 1.05 × 1.33
Latest: FY2026
Profitability
Net Margin
10.0%
10.5% →10.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.05x
0.93x →1.05x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.33x
1.53x →1.33x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 1.0 pp over 5 years. Driven by asset turnover improving (0.93x → 1.05x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 10.5% | 0.93 | 1.53 | 14.9% |
| FY2023 | ₹0Cr | ₹0Cr | 11.6% | 1.07 | 1.43 | 17.9% |
| FY2024 | ₹0Cr | ₹0Cr | 12.8% | 1.01 | 1.37 | 17.8% |
| FY2025 | ₹0Cr | ₹0Cr | 12.9% | 1.03 | 1.38 | 18.2% |
| FY2026 | ₹0Cr | ₹0Cr | 10.0% | 1.05 | 1.33 | 13.9% |
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.