DuPont Decomposition
Why does PPL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
18.7% = 10.7% × 1.35 × 1.30
Latest: FY2025
Profitability
Net Margin
10.7%
7.6% →10.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.35x
2.08x →1.35x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.30x
1.26x →1.30x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 1.2 pp over 4 years. Driven by net margin improving (7.6% → 10.7%), asset turnover declining (2.08x → 1.35x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 7.6% | 2.08 | 1.26 | 19.9% |
| FY2023 | ₹0Cr | ₹0Cr | 10.1% | 2.05 | 1.24 | 25.6% |
| FY2024 | ₹0Cr | ₹0Cr | 13.4% | 1.36 | 1.35 | 24.6% |
| FY2025 | ₹0Cr | ₹0Cr | 10.7% | 1.35 | 1.30 | 18.7% |
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.