DuPont Decomposition
Why does EDELWEISS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
6.7% = 7.0% × 0.14 × 7.03
Latest: FY2025
Profitability
Net Margin
7.0%
47.6% →7.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.14x
0.45x →0.14x
Revenue per ₹ of assets
Leverage
Equity Multiplier
7.03x
1.48x →7.03x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 25.0 pp over 2 years. Driven by net margin declining (47.6% → 7.0%), asset turnover declining (0.45x → 0.14x), leverage rising (1.48x → 7.03x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 2 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 47.6% | 0.45 | 1.48 | 31.8% |
| FY2025 | ₹0Cr | ₹0Cr | 7.0% | 0.14 | 7.03 | 6.7% |
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.