DuPont Decomposition
Why does HCC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
7.8% = 4.2% × 0.47 × 3.99
Latest: FY2026
Profitability
Net Margin
4.2%
2.0% →4.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.47x
0.69x →0.47x
Revenue per ₹ of assets
Leverage
Equity Multiplier
3.99x
8.93x →3.99x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 4.7 pp over 2 years. Driven by net margin improving (2.0% → 4.2%), asset turnover declining (0.69x → 0.47x), leverage falling (8.93x → 3.99x).
Historical Decomposition
Last 2 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2025 | ₹0Cr | ₹0Cr | 2.0% | 0.69 | 8.93 | 12.4% |
| FY2026 | ₹0Cr | ₹0Cr | 4.2% | 0.47 | 3.99 | 7.8% |
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.