DuPont Decomposition
Why does RECLTD earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
20.3% = 72.5% × 0.04 × 7.84
Latest: FY2025
Profitability
Net Margin
72.5%
29.9% →72.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.04x
0.02x →0.04x
Revenue per ₹ of assets
Leverage
Equity Multiplier
7.84x
8.01x →7.84x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 15.0 pp over 3 years. Driven by net margin improving (29.9% → 72.5%). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 29.9% | 0.02 | 8.01 | 5.3% |
| FY2024 | ₹0Cr | ₹0Cr | 32.2% | 0.02 | 7.90 | 5.9% |
| FY2025 | ₹0Cr | ₹0Cr | 72.5% | 0.04 | 7.84 | 20.3% |
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.