DuPont Decomposition
Why does IRFC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
12.3% = 24.0% × 0.06 × 9.28
Latest: FY2025
Profitability
Net Margin
24.0%
21.3% →24.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.06x
0.01x →0.06x
Revenue per ₹ of assets
Leverage
Equity Multiplier
9.28x
10.80x →9.28x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 9.4 pp over 3 years. Driven by net margin improving (21.3% → 24.0%), leverage falling (10.80x → 9.28x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 21.3% | 0.01 | 10.80 | 2.9% |
| FY2024 | ₹0Cr | ₹0Cr | 26.5% | 0.01 | 9.86 | 3.5% |
| FY2025 | ₹0Cr | ₹0Cr | 24.0% | 0.06 | 9.28 | 12.3% |
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.