DuPont Decomposition
Why does LFIC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
6.1% = 50.8% × 0.11 × 1.04
Latest: FY2025
Profitability
Net Margin
50.8%
118.9% →50.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.11x
0.10x →0.11x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.04x
1.06x →1.04x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 6.1 pp over 4 years. Driven by net margin declining (118.9% → 50.8%).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 118.9% | 0.10 | 1.06 | 12.1% |
| FY2023 | ₹0Cr | ₹0Cr | 18.7% | 0.06 | 1.05 | 1.2% |
| FY2024 | ₹0Cr | ₹0Cr | 123.4% | 0.14 | 1.06 | 18.4% |
| FY2025 | ₹0Cr | ₹0Cr | 50.8% | 0.11 | 1.04 | 6.1% |
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.