DuPont Decomposition
Why does HEG earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
2.6% = 5.4% × 0.38 × 1.27
Latest: FY2025
Profitability
Net Margin
5.4%
19.8% →5.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.38x
0.41x →0.38x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.27x
1.36x →1.27x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 8.4 pp over 4 years. Driven by net margin declining (19.8% → 5.4%).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 19.8% | 0.41 | 1.36 | 11.0% |
| FY2023 | ₹0Cr | ₹0Cr | 21.9% | 0.43 | 1.33 | 12.4% |
| FY2024 | ₹0Cr | ₹0Cr | 13.1% | 0.42 | 1.29 | 7.0% |
| FY2025 | ₹0Cr | ₹0Cr | 5.4% | 0.38 | 1.27 | 2.6% |
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.