DuPont Decomposition
Why does IPL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
9.1% = 9.9% × 0.72 × 1.27
Latest: FY2025
Profitability
Net Margin
9.9%
15.1% →9.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.72x
0.22x →0.72x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.27x
1.19x →1.27x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 5.3 pp over 3 years. Driven by net margin declining (15.1% → 9.9%), asset turnover improving (0.22x → 0.72x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 15.1% | 0.22 | 1.19 | 3.9% |
| FY2024 | ₹0Cr | ₹0Cr | 0.8% | 0.13 | 1.21 | 0.1% |
| FY2025 | ₹0Cr | ₹0Cr | 9.9% | 0.72 | 1.27 | 9.1% |
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.