DuPont Decomposition
Why does LAGNAM earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.6% = 2.2% × 1.03 × 4.72
Latest: FY2025
Profitability
Net Margin
2.2%
8.7% →2.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.03x
1.18x →1.03x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.72x
3.28x →4.72x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 23.1 pp over 4 years. Driven by net margin declining (8.7% → 2.2%), asset turnover declining (1.18x → 1.03x), leverage rising (3.28x → 4.72x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 8.7% | 1.18 | 3.28 | 33.7% |
| FY2023 | ₹0Cr | ₹0Cr | 3.4% | 0.94 | 3.30 | 10.3% |
| FY2024 | ₹0Cr | ₹0Cr | 3.4% | 0.80 | 4.90 | 13.4% |
| FY2025 | ₹0Cr | ₹0Cr | 2.2% | 1.03 | 4.72 | 10.6% |
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.