DuPont Decomposition
Why does POONAWALLA earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
-1.2% = -2.5% × 0.11 × 4.29
Latest: FY2025
Profitability
Net Margin
-2.5%
31.3% →-2.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.11x
0.03x →0.11x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.29x
2.81x →4.29x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 4.0 pp over 3 years. Driven by net margin declining (31.3% → -2.5%), leverage rising (2.81x → 4.29x). 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 | 31.3% | 0.03 | 2.81 | 2.8% |
| FY2024 | ₹0Cr | ₹0Cr | 36.3% | 0.04 | 2.95 | 4.1% |
| FY2025 | ₹0Cr | ₹-0Cr | -2.5% | 0.11 | 4.29 | -1.2% |
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.