DuPont Decomposition
Why does NTPC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
12.3% = 12.6% × 0.36 × 2.74
Latest: FY2025
Profitability
Net Margin
12.6%
9.7% →12.6%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.36x
0.40x →0.36x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.74x
3.03x →2.74x
Assets funded by equity vs debt
Trend Analysis
ROE stable at ~12%. Driven by net margin improving (9.7% → 12.6%), leverage falling (3.03x → 2.74x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 9.7% | 0.40 | 3.03 | 11.7% |
| FY2024 | ₹0Cr | ₹0Cr | 11.9% | 0.37 | 2.99 | 13.3% |
| FY2025 | ₹0Cr | ₹0Cr | 12.6% | 0.36 | 2.74 | 12.3% |
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.