DuPont Decomposition
Why does IIFL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
11.9% = 21.7% × 0.09 × 6.40
Latest: FY2026
Profitability
Net Margin
21.7%
17.4% →21.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.09x
0.15x →0.09x
Revenue per ₹ of assets
Leverage
Equity Multiplier
6.40x
7.10x →6.40x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 6.4 pp over 5 years. Driven by net margin improving (17.4% → 21.7%), leverage falling (7.10x → 6.40x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 17.4% | 0.15 | 7.10 | 18.4% |
| FY2023 | ₹0Cr | ₹0Cr | 28.8% | 0.10 | 5.89 | 16.7% |
| FY2024 | ₹0Cr | ₹0Cr | 28.1% | 0.10 | 5.87 | 16.6% |
| FY2025 | ₹0Cr | ₹0Cr | 6.6% | 0.09 | 5.45 | 3.0% |
| FY2026 | ₹0Cr | ₹0Cr | 21.7% | 0.09 | 6.40 | 11.9% |
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.