DuPont Decomposition
Why does HAL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
22.2% = 27.6% × 0.25 × 3.23
Latest: FY2026
Profitability
Net Margin
27.6%
20.9% →27.6%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.25x
0.42x →0.25x
Revenue per ₹ of assets
Leverage
Equity Multiplier
3.23x
3.02x →3.23x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 4.1 pp over 5 years. Driven by net margin improving (20.9% → 27.6%), asset turnover declining (0.42x → 0.25x), leverage rising (3.02x → 3.23x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 20.9% | 0.42 | 3.02 | 26.3% |
| FY2023 | ₹0Cr | ₹0Cr | 22.1% | 0.39 | 2.85 | 24.7% |
| FY2024 | ₹0Cr | ₹0Cr | 27.1% | 0.36 | 2.68 | 26.1% |
| FY2025 | ₹0Cr | ₹0Cr | 27.0% | 0.29 | 3.04 | 23.9% |
| FY2026 | ₹0Cr | ₹0Cr | 27.6% | 0.25 | 3.23 | 22.2% |
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.