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
10.1% = 6.7% × 0.95 × 1.60
Latest: FY2025
Profitability
Net Margin
6.7%
5.8% →6.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.95x
0.24x →0.95x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.60x
1.66x →1.60x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 7.8 pp over 3 years. Driven by asset turnover improving (0.24x → 0.95x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 5.8% | 0.24 | 1.66 | 2.3% |
| FY2024 | ₹0Cr | ₹0Cr | 6.2% | 0.24 | 1.61 | 2.4% |
| FY2025 | ₹0Cr | ₹0Cr | 6.7% | 0.95 | 1.60 | 10.1% |
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.