DuPont Decomposition
Why does NORTHARC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.4% = 16.1% × 0.15 × 4.30
Latest: FY2026
Profitability
Net Margin
16.1%
25.2% →16.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.15x
0.09x →0.15x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.30x
4.59x →4.30x
Assets funded by equity vs debt
Trend Analysis
ROE stable at ~10%. Driven by net margin declining (25.2% → 16.1%), leverage falling (4.59x → 4.30x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 25.2% | 0.09 | 4.59 | 10.5% |
| FY2023 | ₹0Cr | ₹0Cr | 23.3% | 0.11 | 4.79 | 12.4% |
| FY2024 | ₹0Cr | ₹0Cr | 19.0% | 0.14 | 5.06 | 13.3% |
| FY2025 | ₹0Cr | ₹0Cr | 13.4% | 0.17 | 3.97 | 8.9% |
| FY2026 | ₹0Cr | ₹0Cr | 16.1% | 0.15 | 4.30 | 10.4% |
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.