DuPont Decomposition
Why does HPL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.2% = 5.5% × 0.81 × 2.28
Latest: FY2025
Profitability
Net Margin
5.5%
3.1% →5.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.81x
0.21x →0.81x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.28x
2.14x →2.28x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 8.8 pp over 3 years. Driven by net margin improving (3.1% → 5.5%), asset turnover improving (0.21x → 0.81x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 3.1% | 0.21 | 2.14 | 1.4% |
| FY2024 | ₹0Cr | ₹0Cr | 3.2% | 0.23 | 2.26 | 1.7% |
| FY2025 | ₹0Cr | ₹0Cr | 5.5% | 0.81 | 2.28 | 10.2% |
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.