DuPont Decomposition
Why does PFC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
14.8% = 55.2% × 0.04 × 7.59
Latest: FY2025
Profitability
Net Margin
55.2%
30.6% →55.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.04x
0.02x →0.04x
Revenue per ₹ of assets
Leverage
Equity Multiplier
7.59x
8.00x →7.59x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 9.4 pp over 3 years. Driven by net margin improving (30.6% → 55.2%), leverage falling (8.00x → 7.59x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 30.6% | 0.02 | 8.00 | 5.5% |
| FY2024 | ₹0Cr | ₹0Cr | 31.3% | 0.02 | 10.27 | 7.5% |
| FY2025 | ₹0Cr | ₹0Cr | 55.2% | 0.04 | 7.59 | 14.8% |
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.