DuPont Decomposition
Why does CHOLAFIN earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
18.0% = 31.8% × 0.07 × 8.53
Latest: FY2025
Profitability
Net Margin
31.8%
22.9% →31.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.07x
0.03x →0.07x
Revenue per ₹ of assets
Leverage
Equity Multiplier
8.53x
7.92x →8.53x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 12.1 pp over 3 years. Driven by net margin improving (22.9% → 31.8%), leverage rising (7.92x → 8.53x). 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 | 22.9% | 0.03 | 7.92 | 6.0% |
| FY2024 | ₹0Cr | ₹0Cr | 19.6% | 0.03 | 8.00 | 5.4% |
| FY2025 | ₹0Cr | ₹0Cr | 31.8% | 0.07 | 8.53 | 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.