DuPont Decomposition
Why does HSCL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
14.7% = 12.1% × 0.99 × 1.23
Latest: FY2025
Profitability
Net Margin
12.1%
-1.1% →12.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.99x
0.24x →0.99x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.23x
1.85x →1.23x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 15.2 pp over 4 years. Driven by net margin improving (-1.1% → 12.1%), asset turnover improving (0.24x → 0.99x), leverage falling (1.85x → 1.23x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹-0Cr | -1.1% | 0.24 | 1.85 | -0.5% |
| FY2023 | ₹0Cr | ₹0Cr | 7.4% | 0.28 | 1.61 | 3.3% |
| FY2024 | ₹0Cr | ₹0Cr | 9.8% | 0.26 | 1.46 | 3.8% |
| FY2025 | ₹0Cr | ₹0Cr | 12.1% | 0.99 | 1.23 | 14.7% |
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.