DuPont Decomposition
Why does KEC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.7% = 2.6% × 0.97 × 4.15
Latest: FY2025
Profitability
Net Margin
2.6%
0.6% →2.6%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.97x
0.29x →0.97x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.15x
4.36x →4.15x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 9.9 pp over 3 years. Driven by net margin improving (0.6% → 2.6%), asset turnover improving (0.29x → 0.97x), leverage falling (4.36x → 4.15x). 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 | 0.6% | 0.29 | 4.36 | 0.7% |
| FY2024 | ₹0Cr | ₹0Cr | 2.5% | 0.32 | 4.65 | 3.7% |
| FY2025 | ₹0Cr | ₹0Cr | 2.6% | 0.97 | 4.15 | 10.7% |
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.