DuPont Decomposition
Why does HONDAPOWER earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
9.3% = 10.1% × 0.75 × 1.21
Latest: FY2025
Profitability
Net Margin
10.1%
6.9% →10.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.75x
1.32x →0.75x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.21x
1.26x →1.21x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 2.3 pp over 3 years. Driven by net margin improving (6.9% → 10.1%), asset turnover declining (1.32x → 0.75x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 6.9% | 1.32 | 1.26 | 11.6% |
| FY2024 | ₹0Cr | ₹0Cr | 9.4% | 0.99 | 1.22 | 11.3% |
| FY2025 | ₹0Cr | ₹0Cr | 10.1% | 0.75 | 1.21 | 9.3% |
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.