DuPont Decomposition
Why does NHPC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
6.7% = 29.0% × 0.10 × 2.27
Latest: FY2025
Profitability
Net Margin
29.0%
35.5% →29.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.10x
0.02x →0.10x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.27x
2.33x →2.27x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 4.7 pp over 3 years. Driven by net margin declining (35.5% → 29.0%).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 35.5% | 0.02 | 2.33 | 1.9% |
| FY2024 | ₹0Cr | ₹0Cr | 32.4% | 0.02 | 2.41 | 1.6% |
| FY2025 | ₹0Cr | ₹0Cr | 29.0% | 0.10 | 2.27 | 6.7% |
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.