DuPont Decomposition
Why does PURVA earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
3.6% = 1.7% × 0.22 × 9.65
Latest: FY2026
Profitability
Net Margin
1.7%
15.9% →1.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.22x
0.11x →0.22x
Revenue per ₹ of assets
Leverage
Equity Multiplier
9.65x
4.22x →9.65x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 3.7 pp over 5 years. Driven by net margin declining (15.9% → 1.7%), asset turnover improving (0.11x → 0.22x), leverage rising (4.22x → 9.65x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 15.9% | 0.11 | 4.22 | 7.2% |
| FY2023 | ₹0Cr | ₹0Cr | 5.6% | 0.12 | 5.06 | 3.4% |
| FY2024 | ₹0Cr | ₹0Cr | 2.0% | 0.18 | 6.23 | 2.2% |
| FY2025 | ₹0Cr | ₹-0Cr | -8.9% | 0.14 | 8.23 | -10.4% |
| FY2026 | ₹0Cr | ₹0Cr | 1.7% | 0.22 | 9.65 | 3.6% |
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.