DuPont Decomposition
Why does LIBAS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
6.6% = 7.0% × 0.75 × 1.26
Latest: FY2024
Profitability
Net Margin
7.0%
10.3% →7.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.75x
1.18x →0.75x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.26x
1.56x →1.26x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 12.2 pp over 3 years. Driven by net margin declining (10.3% → 7.0%), asset turnover declining (1.18x → 0.75x), leverage falling (1.56x → 1.26x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 10.3% | 1.18 | 1.56 | 18.8% |
| FY2023 | ₹0Cr | ₹0Cr | 9.4% | 0.86 | 1.29 | 10.5% |
| FY2024 | ₹0Cr | ₹0Cr | 7.0% | 0.75 | 1.26 | 6.6% |
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.