DuPont Decomposition
Why does PRECOT earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
7.3% = 4.0% × 0.89 × 2.09
Latest: FY2025
Profitability
Net Margin
4.0%
-3.7% →4.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.89x
0.26x →0.89x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.09x
2.23x →2.09x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 9.5 pp over 3 years. Driven by net margin improving (-3.7% → 4.0%), asset turnover improving (0.26x → 0.89x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹-0Cr | -3.7% | 0.26 | 2.23 | -2.2% |
| FY2024 | ₹0Cr | ₹0Cr | 2.1% | 0.84 | 2.28 | 4.0% |
| FY2025 | ₹0Cr | ₹0Cr | 4.0% | 0.89 | 2.09 | 7.3% |
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.