DuPont Decomposition
Why does PAKKA earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
8.3% = 9.2% × 0.55 × 1.63
Latest: FY2025
Profitability
Net Margin
9.2%
12.3% →9.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.55x
0.90x →0.55x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.63x
1.97x →1.63x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 13.3 pp over 4 years. Driven by net margin declining (12.3% → 9.2%), asset turnover declining (0.90x → 0.55x), leverage falling (1.97x → 1.63x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 12.3% | 0.90 | 1.97 | 21.6% |
| FY2023 | ₹0Cr | ₹0Cr | 11.3% | 1.09 | 1.82 | 22.4% |
| FY2024 | ₹0Cr | ₹0Cr | 10.1% | 0.80 | 2.02 | 16.2% |
| FY2025 | ₹0Cr | ₹0Cr | 9.2% | 0.55 | 1.63 | 8.3% |
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.