DuPont Decomposition
Why does CHOLAHLDNG earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
8.1% = 6.2% × 0.16 × 8.33
Latest: FY2025
Profitability
Net Margin
6.2%
17.4% →6.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.16x
0.04x →0.16x
Revenue per ₹ of assets
Leverage
Equity Multiplier
8.33x
8.06x →8.33x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 2.5 pp over 3 years. Driven by net margin declining (17.4% → 6.2%), asset turnover improving (0.04x → 0.16x), leverage rising (8.06x → 8.33x). 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 | 17.4% | 0.04 | 8.06 | 5.5% |
| FY2024 | ₹0Cr | ₹0Cr | 16.1% | 0.04 | 8.00 | 5.2% |
| FY2025 | ₹0Cr | ₹0Cr | 6.2% | 0.16 | 8.33 | 8.1% |
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.