DuPont Decomposition
Why does POCL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
9.8% = 2.8% × 2.77 × 1.24
Latest: FY2025
Profitability
Net Margin
2.8%
3.3% →2.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
2.77x
4.40x →2.77x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.24x
1.59x →1.24x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 13.4 pp over 4 years. Driven by asset turnover declining (4.40x → 2.77x), leverage falling (1.59x → 1.24x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 3.3% | 4.40 | 1.59 | 23.2% |
| FY2023 | ₹0Cr | ₹0Cr | 2.8% | 3.12 | 1.79 | 15.7% |
| FY2024 | ₹0Cr | ₹0Cr | 2.1% | 3.20 | 1.35 | 8.9% |
| FY2025 | ₹0Cr | ₹0Cr | 2.8% | 2.77 | 1.24 | 9.8% |
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.