DuPont Decomposition
Why does PRECAM earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
6.8% = 6.4% × 0.78 × 1.37
Latest: FY2025
Profitability
Net Margin
6.4%
4.0% →6.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.78x
0.25x →0.78x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.37x
1.55x →1.37x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 5.3 pp over 3 years. Driven by net margin improving (4.0% → 6.4%), asset turnover improving (0.25x → 0.78x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 4.0% | 0.25 | 1.55 | 1.6% |
| FY2024 | ₹0Cr | ₹0Cr | 1.3% | 0.25 | 1.39 | 0.5% |
| FY2025 | ₹0Cr | ₹0Cr | 6.4% | 0.78 | 1.37 | 6.8% |
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.