DuPont Decomposition
Why does MHRIL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
16.2% = 4.8% × 0.25 × 13.46
Latest: FY2025
Profitability
Net Margin
4.8%
7.9% →4.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.25x
0.08x →0.25x
Revenue per ₹ of assets
Leverage
Equity Multiplier
13.46x
23.90x →13.46x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 1.7 pp over 3 years. Driven by net margin declining (7.9% → 4.8%), asset turnover improving (0.08x → 0.25x), leverage falling (23.90x → 13.46x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 7.9% | 0.08 | 23.90 | 14.4% |
| FY2024 | ₹0Cr | ₹0Cr | 10.4% | 0.08 | 18.79 | 15.9% |
| FY2025 | ₹0Cr | ₹0Cr | 4.8% | 0.25 | 13.46 | 16.2% |
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.