DuPont Decomposition
Why does IOC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
7.1% = 1.8% × 1.49 × 2.65
Latest: FY2025
Profitability
Net Margin
1.8%
4.7% →1.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.49x
0.52x →1.49x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.65x
3.16x →2.65x
Assets funded by equity vs debt
Trend Analysis
ROE stable at ~7%. Driven by net margin declining (4.7% → 1.8%), asset turnover improving (0.52x → 1.49x), leverage falling (3.16x → 2.65x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 4.7% | 0.52 | 3.16 | 7.8% |
| FY2024 | ₹0Cr | ₹0Cr | 2.5% | 0.46 | 2.63 | 3.0% |
| FY2025 | ₹0.1Cr | ₹0Cr | 1.8% | 1.49 | 2.65 | 7.1% |
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.