DuPont Decomposition
Why does HERCULES earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
3.8% = 20.0% × 0.17 × 1.11
Latest: FY2024
Profitability
Net Margin
20.0%
13.8% →20.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.17x
0.16x →0.17x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.11x
1.10x →1.11x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 1.4 pp over 3 years. Driven by net margin improving (13.8% → 20.0%).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 13.8% | 0.16 | 1.10 | 2.4% |
| FY2023 | ₹0Cr | ₹0Cr | 69.2% | 0.19 | 1.10 | 14.6% |
| FY2024 | ₹0Cr | ₹0Cr | 20.0% | 0.17 | 1.11 | 3.8% |
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.