DuPont Decomposition
Why does GENSOL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
16.4% = 5.5% × 0.41 × 7.15
Latest: FY2024
Profitability
Net Margin
5.5%
7.1% →5.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.41x
0.69x →0.41x
Revenue per ₹ of assets
Leverage
Equity Multiplier
7.15x
4.93x →7.15x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 7.8 pp over 3 years. Driven by net margin declining (7.1% → 5.5%), asset turnover declining (0.69x → 0.41x), leverage rising (4.93x → 7.15x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 7.1% | 0.69 | 4.93 | 24.2% |
| FY2023 | ₹0Cr | ₹0Cr | 6.5% | 0.33 | 5.13 | 11.2% |
| FY2024 | ₹0Cr | ₹0Cr | 5.5% | 0.41 | 7.15 | 16.4% |
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.