DuPont Decomposition
Why does INDIGO earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
77.5% = 9.3% × 0.67 × 12.37
Latest: FY2025
Profitability
Net Margin
9.3%
12.1% →9.3%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.67x
0.82x →0.67x
Revenue per ₹ of assets
Leverage
Equity Multiplier
12.37x
41.19x →12.37x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 331.9 pp over 2 years. Driven by net margin declining (12.1% → 9.3%), asset turnover declining (0.82x → 0.67x), leverage falling (41.19x → 12.37x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 2 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2024 | ₹0Cr | ₹0Cr | 12.1% | 0.82 | 41.19 | 409.4% |
| FY2025 | ₹0Cr | ₹0Cr | 9.3% | 0.67 | 12.37 | 77.5% |
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.