DuPont Decomposition
Why does MODIS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
18.6% = 15.4% × 0.62 × 1.95
Latest: FY2026
Profitability
Net Margin
15.4%
9.9% →15.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.62x
0.27x →0.62x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.95x
8.17x →1.95x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 3.4 pp over 5 years. Driven by net margin improving (9.9% → 15.4%), asset turnover improving (0.27x → 0.62x), leverage falling (8.17x → 1.95x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 9.9% | 0.27 | 8.17 | 22.0% |
| FY2023 | ₹0Cr | ₹0Cr | 14.9% | 0.65 | 1.84 | 17.9% |
| FY2024 | ₹0Cr | ₹0Cr | 11.6% | 0.51 | 1.32 | 7.8% |
| FY2025 | ₹0Cr | ₹0Cr | 22.5% | 0.65 | 1.51 | 21.9% |
| FY2026 | ₹0Cr | ₹0Cr | 15.4% | 0.62 | 1.95 | 18.6% |
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.