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
7.5% = 4.2% × 0.91 × 1.94
Latest: FY2026
Profitability
Net Margin
4.2%
11.0% →4.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.91x
1.02x →0.91x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.94x
2.10x →1.94x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 16.3 pp over 5 years. Driven by net margin declining (11.0% → 4.2%), asset turnover declining (1.02x → 0.91x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 11.0% | 1.02 | 2.10 | 23.7% |
| FY2023 | ₹0Cr | ₹-0Cr | -2.8% | 1.01 | 2.23 | -6.4% |
| FY2024 | ₹0Cr | ₹0Cr | 2.1% | 0.84 | 2.28 | 4.0% |
| FY2025 | ₹0Cr | ₹0Cr | 4.0% | 0.89 | 2.09 | 7.3% |
| FY2026 | ₹0Cr | ₹0Cr | 4.2% | 0.91 | 1.94 | 7.5% |
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.