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
17.2% = 30.5% × 0.07 × 8.06
Latest: FY2026
Profitability
Net Margin
30.5%
36.7% →30.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.07x
0.07x →0.07x
Revenue per ₹ of assets
Leverage
Equity Multiplier
8.06x
7.01x →8.06x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 1.1 pp over 5 years. Driven by net margin declining (36.7% → 30.5%), leverage rising (7.01x → 8.06x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 36.7% | 0.07 | 7.01 | 18.3% |
| FY2023 | ₹0Cr | ₹0Cr | 37.3% | 0.06 | 7.92 | 18.6% |
| FY2024 | ₹0Cr | ₹0Cr | 34.4% | 0.06 | 8.00 | 17.5% |
| FY2025 | ₹0Cr | ₹0Cr | 31.2% | 0.07 | 8.53 | 18.0% |
| FY2026 | ₹0Cr | ₹0Cr | 30.5% | 0.07 | 8.06 | 17.2% |
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.