DuPont Decomposition
Why does KECL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
6.4% = 1.4% × 0.93 × 4.80
Latest: FY2026
Profitability
Net Margin
1.4%
20.1% →1.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.93x
0.54x →0.93x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.80x
8.09x →4.80x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 82.3 pp over 5 years. Driven by net margin declining (20.1% → 1.4%), asset turnover improving (0.54x → 0.93x), leverage falling (8.09x → 4.80x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 20.1% | 0.54 | 8.09 | 88.7% |
| FY2023 | ₹0Cr | ₹0Cr | 6.6% | 0.77 | 6.67 | 33.8% |
| FY2024 | ₹0Cr | ₹0Cr | 2.5% | 0.87 | 7.77 | 17.1% |
| FY2025 | ₹0Cr | ₹0Cr | 0.7% | 0.90 | 5.24 | 3.3% |
| FY2026 | ₹0Cr | ₹0Cr | 1.4% | 0.93 | 4.80 | 6.4% |
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.