DuPont Decomposition
Why does HUDCO earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
15.1% = 75.3% × 0.03 × 7.15
Latest: FY2025
Profitability
Net Margin
75.3%
34.3% →75.3%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.03x
0.02x →0.03x
Revenue per ₹ of assets
Leverage
Equity Multiplier
7.15x
5.24x →7.15x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 10.9 pp over 3 years. Driven by net margin improving (34.3% → 75.3%), leverage rising (5.24x → 7.15x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 34.3% | 0.02 | 5.24 | 4.1% |
| FY2024 | ₹0Cr | ₹0Cr | 33.9% | 0.02 | 5.62 | 4.2% |
| FY2025 | ₹0Cr | ₹0Cr | 75.3% | 0.03 | 7.15 | 15.1% |
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.