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
11.9% = 11.3% × 0.79 × 1.32
Latest: FY2026
Profitability
Net Margin
11.3%
22.3% →11.3%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.79x
0.90x →0.79x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.32x
1.24x →1.32x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 12.9 pp over 5 years. Driven by net margin declining (22.3% → 11.3%), asset turnover declining (0.90x → 0.79x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 22.3% | 0.90 | 1.24 | 24.8% |
| FY2023 | ₹0Cr | ₹0Cr | 16.2% | 0.96 | 1.19 | 18.5% |
| FY2024 | ₹0Cr | ₹0Cr | 8.9% | 0.68 | 1.21 | 7.3% |
| FY2025 | ₹0Cr | ₹0Cr | 9.9% | 0.73 | 1.27 | 9.1% |
| FY2026 | ₹0Cr | ₹0Cr | 11.3% | 0.79 | 1.32 | 11.9% |
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.