DuPont Decomposition
Why does HCG earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
1.0% = 0.5% × 0.65 × 2.94
Latest: FY2026
Profitability
Net Margin
0.5%
3.9% →0.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.65x
0.62x →0.65x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.94x
2.55x →2.94x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 5.1 pp over 5 years. Driven by net margin declining (3.9% → 0.5%), leverage rising (2.55x → 2.94x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 3.9% | 0.62 | 2.55 | 6.2% |
| FY2023 | ₹0Cr | ₹0Cr | 1.8% | 0.72 | 2.69 | 3.4% |
| FY2024 | ₹0Cr | ₹0Cr | 2.5% | 0.70 | 3.28 | 5.8% |
| FY2025 | ₹0Cr | ₹0Cr | 2.0% | 0.63 | 3.84 | 4.8% |
| FY2026 | ₹0Cr | ₹0Cr | 0.5% | 0.65 | 2.94 | 1.0% |
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.