DuPont Decomposition
Why does CESC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.9% = 8.1% × 0.41 × 3.25
Latest: FY2025
Profitability
Net Margin
8.1%
14.3% →8.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.41x
0.08x →0.41x
Revenue per ₹ of assets
Leverage
Equity Multiplier
3.25x
3.46x →3.25x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 6.8 pp over 3 years. Driven by net margin declining (14.3% → 8.1%), asset turnover improving (0.08x → 0.41x), leverage falling (3.46x → 3.25x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 14.3% | 0.08 | 3.46 | 4.1% |
| FY2024 | ₹0Cr | ₹0Cr | 12.3% | 0.09 | 3.25 | 3.6% |
| FY2025 | ₹0Cr | ₹0Cr | 8.1% | 0.41 | 3.25 | 10.9% |
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.