DuPont Decomposition
Why does MRF earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
11.6% = 7.8% × 0.97 × 1.52
Latest: FY2026
Profitability
Net Margin
7.8%
3.5% →7.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.97x
0.83x →0.97x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.52x
1.64x →1.52x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 6.8 pp over 5 years. Driven by net margin improving (3.5% → 7.8%), asset turnover improving (0.83x → 0.97x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 3.5% | 0.83 | 1.64 | 4.8% |
| FY2023 | ₹0Cr | ₹0Cr | 3.4% | 0.94 | 1.66 | 5.2% |
| FY2024 | ₹0Cr | ₹0Cr | 8.3% | 0.93 | 1.61 | 12.5% |
| FY2025 | ₹0Cr | ₹0Cr | 6.7% | 0.95 | 1.60 | 10.1% |
| FY2026 | ₹0Cr | ₹0Cr | 7.8% | 0.97 | 1.52 | 11.6% |
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.