DuPont Decomposition
Why does ESSENTIA earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
2.3% = 0.9% × 2.00 × 1.30
Latest: FY2025
Profitability
Net Margin
0.9%
2.8% →0.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
2.00x
1.50x →2.00x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.30x
2.13x →1.30x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 6.6 pp over 3 years. Driven by net margin declining (2.8% → 0.9%), asset turnover improving (1.50x → 2.00x), leverage falling (2.13x → 1.30x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 2.8% | 1.50 | 2.13 | 8.8% |
| FY2024 | ₹0Cr | ₹0Cr | 5.6% | 1.37 | 1.72 | 13.2% |
| FY2025 | ₹0Cr | ₹0Cr | 0.9% | 2.00 | 1.30 | 2.3% |
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.