DuPont Decomposition
Why does MEIL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
29.2% = 8.6% × 1.50 × 2.26
Latest: FY2025
Profitability
Net Margin
8.6%
3.6% →8.6%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.50x
1.06x →1.50x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.26x
3.49x →2.26x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 15.9 pp over 4 years. Driven by net margin improving (3.6% → 8.6%), asset turnover improving (1.06x → 1.50x), leverage falling (3.49x → 2.26x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 3.6% | 1.06 | 3.49 | 13.3% |
| FY2023 | ₹0Cr | ₹0Cr | 7.0% | 1.60 | 2.35 | 26.3% |
| FY2024 | ₹0Cr | ₹0Cr | 4.7% | 1.82 | 2.14 | 18.2% |
| FY2025 | ₹0Cr | ₹0Cr | 8.6% | 1.50 | 2.26 | 29.2% |
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.