DuPont Decomposition
Why does LAL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
12.3% = 9.2% × 0.87 × 1.53
Latest: FY2025
Profitability
Net Margin
9.2%
0.5% →9.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.87x
0.69x →0.87x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.53x
2.76x →1.53x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 11.3 pp over 4 years. Driven by net margin improving (0.5% → 9.2%), asset turnover improving (0.69x → 0.87x), leverage falling (2.76x → 1.53x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 0.5% | 0.69 | 2.76 | 0.9% |
| FY2023 | ₹0Cr | ₹0Cr | 5.8% | 1.05 | 2.70 | 16.4% |
| FY2024 | ₹0Cr | ₹0Cr | 9.7% | 0.88 | 2.39 | 20.4% |
| FY2025 | ₹0Cr | ₹0Cr | 9.2% | 0.87 | 1.53 | 12.3% |
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.