DuPont Decomposition
Why does HDBFS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
12.3% = 13.8% × 0.15 × 5.98
Latest: FY2026
Profitability
Net Margin
13.8%
16.0% →13.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.15x
0.17x →0.15x
Revenue per ₹ of assets
Leverage
Equity Multiplier
5.98x
6.12x →5.98x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 4.8 pp over 4 years. Driven by net margin declining (16.0% → 13.8%). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 16.0% | 0.17 | 6.12 | 17.1% |
| FY2024 | ₹0Cr | ₹0Cr | 17.6% | 0.15 | 6.73 | 17.9% |
| FY2025 | ₹0Cr | ₹0Cr | 13.4% | 0.15 | 6.87 | 13.8% |
| FY2026 | ₹0Cr | ₹0Cr | 13.8% | 0.15 | 5.98 | 12.3% |
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.