DuPont Decomposition
Why does ISFT earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
5.5% = 2.5% × 1.80 × 1.24
Latest: FY2025
Profitability
Net Margin
2.5%
3.0% →2.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.80x
1.28x →1.80x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.24x
1.98x →1.24x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 2.1 pp over 4 years. Driven by asset turnover improving (1.28x → 1.80x), leverage falling (1.98x → 1.24x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 3.0% | 1.28 | 1.98 | 7.7% |
| FY2023 | ₹0Cr | ₹0Cr | 1.8% | 1.24 | 2.07 | 4.7% |
| FY2024 | ₹0Cr | ₹0Cr | 2.0% | 1.24 | 1.86 | 4.6% |
| FY2025 | ₹0Cr | ₹0Cr | 2.5% | 1.80 | 1.24 | 5.5% |
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.