DuPont Decomposition
Why does IKS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
27.2% = 18.3% × 0.87 × 1.71
Latest: FY2025
Profitability
Net Margin
18.3%
30.5% →18.3%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.87x
0.97x →0.87x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.71x
1.22x →1.71x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 8.8 pp over 4 years. Driven by net margin declining (30.5% → 18.2%), leverage rising (1.22x → 1.71x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 30.5% | 0.97 | 1.22 | 36.0% |
| FY2023 | ₹0Cr | ₹0Cr | 29.6% | 1.04 | 1.19 | 36.8% |
| FY2024 | ₹0Cr | ₹0Cr | 20.4% | 0.60 | 2.61 | 32.0% |
| FY2025 | ₹0Cr | ₹0Cr | 18.3% | 0.87 | 1.71 | 27.2% |
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.