DuPont Decomposition
Why does DCMSHRIRAM earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
8.6% = 5.0% × 0.94 × 1.82
Latest: FY2025
Profitability
Net Margin
5.0%
6.5% →5.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.94x
0.27x →0.94x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.82x
1.73x →1.82x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 5.6 pp over 3 years. Driven by net margin declining (6.5% → 5.0%), asset turnover improving (0.27x → 0.94x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 6.5% | 0.27 | 1.73 | 3.0% |
| FY2024 | ₹0Cr | ₹0Cr | 4.7% | 0.22 | 1.77 | 1.8% |
| FY2025 | ₹0Cr | ₹0Cr | 5.0% | 0.94 | 1.82 | 8.6% |
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.