DuPont Decomposition
Why does DRREDDY earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
16.8% = 17.4% × 0.66 × 1.46
Latest: FY2025
Profitability
Net Margin
17.4%
15.2% →17.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.66x
0.20x →0.66x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.46x
1.39x →1.46x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 12.6 pp over 3 years. Driven by net margin improving (15.2% → 17.4%), asset turnover improving (0.20x → 0.66x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 15.2% | 0.20 | 1.39 | 4.1% |
| FY2024 | ₹0Cr | ₹0Cr | 20.3% | 0.17 | 1.25 | 4.3% |
| FY2025 | ₹0Cr | ₹0Cr | 17.4% | 0.66 | 1.46 | 16.8% |
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.