DuPont Decomposition
Why does ERIS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.8% = 12.2% × 0.41 × 2.15
Latest: FY2025
Profitability
Net Margin
12.2%
15.3% →12.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.41x
0.11x →0.41x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.15x
1.67x →2.15x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 8.0 pp over 3 years. Driven by net margin declining (15.3% → 12.2%), asset turnover improving (0.11x → 0.41x), leverage rising (1.67x → 2.15x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 15.3% | 0.11 | 1.67 | 2.8% |
| FY2024 | ₹0Cr | ₹0Cr | 14.4% | 0.08 | 2.73 | 3.1% |
| FY2025 | ₹0Cr | ₹0Cr | 12.2% | 0.41 | 2.15 | 10.8% |
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.