DuPont Decomposition
Why does IRB earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
32.7% = 91.9% × 0.13 × 2.72
Latest: FY2025
Profitability
Net Margin
91.9%
8.9% →91.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.13x
0.25x →0.13x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.72x
1.89x →2.72x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 28.5 pp over 3 years. Driven by net margin improving (8.9% → 91.9%), asset turnover declining (0.25x → 0.13x), leverage rising (1.89x → 2.72x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 8.9% | 0.25 | 1.89 | 4.2% |
| FY2024 | ₹0Cr | ₹0Cr | 8.2% | 0.16 | 3.27 | 4.4% |
| FY2025 | ₹0Cr | ₹0Cr | 91.9% | 0.13 | 2.72 | 32.7% |
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.