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
20.9% = 11.9% × 1.14 × 1.55
Latest: FY2026
Profitability
Net Margin
11.9%
13.3% →11.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.14x
1.41x →1.14x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.55x
1.42x →1.55x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 5.7 pp over 4 years. Driven by net margin declining (13.3% → 11.9%), asset turnover declining (1.41x → 1.14x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 13.3% | 1.41 | 1.42 | 26.6% |
| FY2024 | ₹0Cr | ₹0Cr | 12.9% | 1.29 | 1.38 | 22.9% |
| FY2025 | ₹0Cr | ₹0Cr | 12.1% | 1.24 | 1.35 | 20.3% |
| FY2026 | ₹0Cr | ₹0Cr | 11.9% | 1.14 | 1.55 | 20.9% |
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.