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
9.1% = 5.0% × 0.76 × 2.40
Latest: FY2026
Profitability
Net Margin
5.0%
0.8% →5.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.76x
0.62x →0.76x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.40x
2.14x →2.40x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 8.1 pp over 5 years. Driven by net margin improving (0.8% → 5.0%), asset turnover improving (0.62x → 0.76x), leverage rising (2.14x → 2.40x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 0.8% | 0.62 | 2.14 | 1.0% |
| FY2023 | ₹0Cr | ₹0Cr | 2.4% | 0.74 | 2.14 | 3.8% |
| FY2024 | ₹0Cr | ₹0Cr | 3.0% | 0.78 | 2.26 | 5.3% |
| FY2025 | ₹0Cr | ₹0Cr | 5.5% | 0.81 | 2.29 | 10.3% |
| FY2026 | ₹0Cr | ₹0Cr | 5.0% | 0.76 | 2.40 | 9.1% |
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.