DuPont Decomposition
Why does ITC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
49.4% = 46.5% × 0.85 × 1.25
Latest: FY2025
Profitability
Net Margin
46.5%
27.5% →46.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.85x
0.22x →0.85x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.25x
1.24x →1.25x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 41.8 pp over 3 years. Driven by net margin improving (27.5% → 46.5%), asset turnover improving (0.22x → 0.85x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 27.5% | 0.22 | 1.24 | 7.6% |
| FY2024 | ₹0Cr | ₹0Cr | 26.7% | 0.21 | 1.23 | 7.0% |
| FY2025 | ₹0Cr | ₹0Cr | 46.5% | 0.85 | 1.25 | 49.4% |
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.