DuPont Decomposition
Why does LEXUS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
-115.3% = -6.8% × 0.60 × 28.02
Latest: FY2025
Profitability
Net Margin
-6.8%
8.5% →-6.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.60x
0.90x →0.60x
Revenue per ₹ of assets
Leverage
Equity Multiplier
28.02x
4.73x →28.02x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 151.3 pp over 4 years. Driven by net margin declining (8.5% → -6.8%), asset turnover declining (0.90x → 0.60x), leverage rising (4.73x → 28.02x). 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 | 8.5% | 0.90 | 4.73 | 36.0% |
| FY2023 | ₹0Cr | ₹-0Cr | -11.8% | 0.64 | 7.66 | -58.1% |
| FY2024 | ₹0Cr | ₹-0Cr | -14.5% | 0.95 | 12.95 | -177.9% |
| FY2025 | ₹0Cr | ₹-0Cr | -6.8% | 0.60 | 28.02 | -115.3% |
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.