DuPont Decomposition
Why does HGM earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
17.5% = 18.8% × 0.57 × 1.64
Latest: FY2025
Profitability
Net Margin
18.8%
21.4% →18.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.57x
0.22x →0.57x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.64x
1.51x →1.64x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 10.4 pp over 4 years. Driven by net margin declining (21.4% → 18.8%), asset turnover improving (0.22x → 0.57x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 21.4% | 0.22 | 1.51 | 7.2% |
| FY2023 | ₹0Cr | ₹0Cr | 37.9% | 0.32 | 1.67 | 20.2% |
| FY2024 | ₹0Cr | ₹0Cr | 16.7% | 0.45 | 1.56 | 11.8% |
| FY2025 | ₹0Cr | ₹0Cr | 18.8% | 0.57 | 1.64 | 17.5% |
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.