DuPont Decomposition
Why does RCF earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
5.1% = 3.5% × 0.62 × 2.37
Latest: FY2025
Profitability
Net Margin
3.5%
3.7% →3.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.62x
0.48x →0.62x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.37x
2.11x →2.37x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 1.4 pp over 3 years. Driven by asset turnover improving (0.48x → 0.62x), leverage rising (2.11x → 2.37x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 3.7% | 0.48 | 2.11 | 3.7% |
| FY2024 | ₹0Cr | ₹0Cr | 2.5% | 0.34 | 2.48 | 2.1% |
| FY2025 | ₹0Cr | ₹0Cr | 3.5% | 0.62 | 2.37 | 5.1% |
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.