DuPont Decomposition
Why does PPAP earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
2.4% = 1.3% × 0.97 × 1.97
Latest: FY2025
Profitability
Net Margin
1.3%
-0.2% →1.3%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.97x
0.83x →0.97x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.97x
1.64x →1.97x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 2.7 pp over 4 years. Driven by net margin improving (-0.2% → 1.3%), asset turnover improving (0.83x → 0.97x), leverage rising (1.64x → 1.97x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹-0Cr | -0.2% | 0.83 | 1.64 | -0.3% |
| FY2023 | ₹0Cr | ₹-0Cr | -1.2% | 0.93 | 1.86 | -2.0% |
| FY2024 | ₹0Cr | ₹-0Cr | -2.5% | 0.94 | 1.96 | -4.6% |
| FY2025 | ₹0Cr | ₹0Cr | 1.3% | 0.97 | 1.97 | 2.4% |
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.