DuPont Decomposition
Why does MCL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.3% = 3.8% × 1.62 × 1.68
Latest: FY2025
Profitability
Net Margin
3.8%
-2.0% →3.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.62x
1.07x →1.62x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.68x
2.59x →1.68x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 15.8 pp over 3 years. Driven by net margin improving (-2.0% → 3.8%), asset turnover improving (1.07x → 1.62x), leverage falling (2.59x → 1.68x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹-0Cr | -2.0% | 1.07 | 2.59 | -5.5% |
| FY2024 | ₹0Cr | ₹0Cr | 3.5% | 0.55 | 1.56 | 3.0% |
| FY2025 | ₹0Cr | ₹0Cr | 3.8% | 1.62 | 1.68 | 10.3% |
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.