DuPont Decomposition
Why does GLAXO earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
47.5% = 24.9% × 0.91 × 2.11
Latest: FY2025
Profitability
Net Margin
24.9%
16.9% →24.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.91x
0.24x →0.91x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.11x
1.91x →2.11x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 39.9 pp over 3 years. Driven by net margin improving (16.9% → 24.9%), asset turnover improving (0.24x → 0.91x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 16.9% | 0.24 | 1.91 | 7.7% |
| FY2024 | ₹0Cr | ₹0Cr | 20.9% | 0.26 | 2.00 | 10.9% |
| FY2025 | ₹0Cr | ₹0Cr | 24.9% | 0.91 | 2.11 | 47.5% |
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.