DuPont Decomposition
Why does NRAIL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
2.3% = 1.1% × 0.93 × 2.28
Latest: FY2025
Profitability
Net Margin
1.1%
5.2% →1.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.93x
0.37x →0.93x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.28x
1.64x →2.28x
Assets funded by equity vs debt
Trend Analysis
ROE stable at ~2%. Driven by net margin declining (5.2% → 1.1%), asset turnover improving (0.37x → 0.93x), leverage rising (1.64x → 2.28x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 5.2% | 0.37 | 1.64 | 3.1% |
| FY2024 | ₹0Cr | ₹0Cr | 6.3% | 0.16 | 2.06 | 2.1% |
| FY2025 | ₹0Cr | ₹0Cr | 1.1% | 0.93 | 2.28 | 2.3% |
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.