DuPont Decomposition
Why does MODISONLTD earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
11.4% = 5.0% × 1.53 × 1.47
Latest: FY2025
Profitability
Net Margin
5.0%
8.8% →5.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.53x
0.39x →1.53x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.47x
1.18x →1.47x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 7.3 pp over 3 years. Driven by net margin declining (8.8% → 5.0%), asset turnover improving (0.39x → 1.53x), leverage rising (1.18x → 1.47x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 8.8% | 0.39 | 1.18 | 4.1% |
| FY2024 | ₹0Cr | ₹0Cr | 5.4% | 0.42 | 1.33 | 3.0% |
| FY2025 | ₹0Cr | ₹0Cr | 5.0% | 1.53 | 1.47 | 11.4% |
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.