DuPont Decomposition
Why does DCM earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
51.1% = 31.9% × 0.55 × 2.91
Latest: FY2025
Profitability
Net Margin
31.9%
44.0% →31.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.55x
0.59x →0.55x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.91x
9.79x →2.91x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 201.6 pp over 4 years. Driven by net margin declining (44.0% → 31.9%), leverage falling (9.79x → 2.91x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 44.0% | 0.59 | 9.79 | 252.7% |
| FY2023 | ₹0Cr | ₹0Cr | 3.4% | 0.61 | 7.62 | 15.6% |
| FY2024 | ₹0Cr | ₹0Cr | 7.7% | 0.59 | 5.46 | 25.1% |
| FY2025 | ₹0Cr | ₹0Cr | 31.9% | 0.55 | 2.91 | 51.1% |
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.