DuPont Decomposition
Why does INNOVACAP earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
13.4% = 10.4% × 0.78 × 1.65
Latest: FY2025
Profitability
Net Margin
10.4%
8.0% →10.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.78x
1.39x →0.78x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.65x
2.76x →1.65x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 17.3 pp over 4 years. Driven by net margin improving (8.0% → 10.4%), asset turnover declining (1.39x → 0.78x), leverage falling (2.76x → 1.65x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 8.0% | 1.39 | 2.76 | 30.7% |
| FY2023 | ₹0Cr | ₹0Cr | 7.3% | 1.31 | 2.55 | 24.6% |
| FY2024 | ₹0Cr | ₹0Cr | 10.9% | 0.20 | 1.59 | 3.5% |
| FY2025 | ₹0Cr | ₹0Cr | 10.4% | 0.78 | 1.65 | 13.4% |
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.