DuPont Decomposition
Why does LTM earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
20.3% = 12.1% × 1.24 × 1.35
Latest: FY2025
Profitability
Net Margin
12.1%
12.8% →12.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.24x
0.37x →1.24x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.35x
1.42x →1.35x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 13.5 pp over 3 years. Driven by asset turnover improving (0.37x → 1.24x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 12.8% | 0.37 | 1.42 | 6.7% |
| FY2024 | ₹0Cr | ₹0Cr | 12.7% | 0.33 | 1.37 | 5.7% |
| FY2025 | ₹0Cr | ₹0Cr | 12.1% | 1.24 | 1.35 | 20.3% |
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.