DuPont Decomposition
Why does IOLCP earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
6.0% = 4.9% × 0.87 × 1.41
Latest: FY2025
Profitability
Net Margin
4.9%
6.3% →4.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.87x
1.10x →0.87x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.41x
1.34x →1.41x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 3.2 pp over 3 years. Driven by net margin declining (6.3% → 4.9%), asset turnover declining (1.10x → 0.87x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 6.3% | 1.10 | 1.34 | 9.2% |
| FY2024 | ₹0Cr | ₹0Cr | 6.3% | 0.95 | 1.39 | 8.3% |
| FY2025 | ₹0Cr | ₹0Cr | 4.9% | 0.87 | 1.41 | 6.0% |
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.