DuPont Decomposition
Why does HIKAL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
7.2% = 4.9% × 0.73 × 2.00
Latest: FY2025
Profitability
Net Margin
4.9%
8.3% →4.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.73x
0.87x →0.73x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.00x
2.07x →2.00x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 7.8 pp over 4 years. Driven by net margin declining (8.3% → 4.9%), asset turnover declining (0.87x → 0.73x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 8.3% | 0.87 | 2.07 | 15.0% |
| FY2023 | ₹0Cr | ₹0Cr | 3.9% | 0.85 | 2.10 | 6.9% |
| FY2024 | ₹0Cr | ₹0Cr | 3.9% | 0.72 | 2.09 | 5.9% |
| FY2025 | ₹0Cr | ₹0Cr | 4.9% | 0.73 | 2.00 | 7.2% |
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.