DuPont Decomposition
Why does HGS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
1.6% = 2.8% × 0.39 × 1.45
Latest: FY2025
Profitability
Net Margin
2.8%
142.5% →2.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.39x
0.36x →0.39x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.45x
1.44x →1.45x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 73.3 pp over 4 years. Driven by net margin declining (142.5% → 2.8%).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 142.5% | 0.36 | 1.44 | 74.9% |
| FY2023 | ₹0Cr | ₹0Cr | 7.4% | 0.39 | 1.33 | 3.9% |
| FY2024 | ₹0Cr | ₹0Cr | 2.9% | 0.41 | 1.49 | 1.8% |
| FY2025 | ₹0Cr | ₹0Cr | 2.8% | 0.39 | 1.45 | 1.6% |
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.