DuPont Decomposition
Why does KCP earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
7.5% = 5.8% × 0.81 × 1.59
Latest: FY2025
Profitability
Net Margin
5.8%
9.4% →5.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.81x
0.23x →0.81x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.59x
2.14x →1.59x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 2.9 pp over 3 years. Driven by net margin declining (9.4% → 5.8%), asset turnover improving (0.23x → 0.81x), leverage falling (2.14x → 1.59x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 9.4% | 0.23 | 2.14 | 4.6% |
| FY2024 | ₹0Cr | ₹0Cr | 13.5% | 0.22 | 2.01 | 6.0% |
| FY2025 | ₹0Cr | ₹0Cr | 5.8% | 0.81 | 1.59 | 7.5% |
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.