DuPont Decomposition
Why does NFL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
6.8% = 3.1% × 0.63 × 3.43
Latest: FY2025
Profitability
Net Margin
3.1%
1.6% →3.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.63x
2.36x →0.63x
Revenue per ₹ of assets
Leverage
Equity Multiplier
3.43x
4.93x →3.43x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 11.3 pp over 3 years. Driven by net margin improving (1.6% → 3.1%), asset turnover declining (2.36x → 0.63x), leverage falling (4.93x → 3.43x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 1.6% | 2.36 | 4.93 | 18.0% |
| FY2024 | ₹0Cr | ₹0Cr | 0.6% | 2.10 | 4.39 | 5.9% |
| FY2025 | ₹0Cr | ₹0Cr | 3.1% | 0.63 | 3.43 | 6.8% |
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.