DuPont Decomposition
Why does OBCL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
2.5% = 0.7% × 2.08 × 1.77
Latest: FY2025
Profitability
Net Margin
0.7%
2.6% →0.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
2.08x
2.96x →2.08x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.77x
1.25x →1.77x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 7.0 pp over 4 years. Driven by net margin declining (2.6% → 0.7%), asset turnover declining (2.96x → 2.08x), leverage rising (1.25x → 1.77x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 2.6% | 2.96 | 1.25 | 9.6% |
| FY2023 | ₹0Cr | ₹0Cr | 1.0% | 3.73 | 1.15 | 4.3% |
| FY2024 | ₹0Cr | ₹0Cr | 1.1% | 2.93 | 1.27 | 4.1% |
| FY2025 | ₹0Cr | ₹0Cr | 0.7% | 2.08 | 1.77 | 2.5% |
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.