DuPont Decomposition
Why does RAINBOW earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
16.5% = 16.3% × 0.63 × 1.61
Latest: FY2025
Profitability
Net Margin
16.3%
18.2% →16.3%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.63x
0.65x →0.63x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.61x
1.68x →1.61x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 3.4 pp over 3 years. Driven by net margin declining (18.2% → 16.3%).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 18.2% | 0.65 | 1.68 | 19.9% |
| FY2024 | ₹0Cr | ₹0Cr | 16.9% | 0.59 | 1.72 | 17.2% |
| FY2025 | ₹0Cr | ₹0Cr | 16.3% | 0.63 | 1.61 | 16.5% |
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.