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
19.2% = 74.7% × 0.03 × 7.53
Latest: FY2026
Profitability
Net Margin
74.7%
25.6% →74.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.03x
0.10x →0.03x
Revenue per ₹ of assets
Leverage
Equity Multiplier
7.53x
8.01x →7.53x
Assets funded by equity vs debt
Trend Analysis
ROE stable at ~19%. Driven by net margin improving (25.6% → 74.7%), leverage falling (8.01x → 7.53x). 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 | 25.6% | 0.10 | 8.01 | 19.6% |
| FY2023 | ₹0Cr | ₹0Cr | 76.5% | 0.03 | 8.01 | 19.2% |
| FY2024 | ₹0Cr | ₹0Cr | 82.0% | 0.03 | 7.90 | 20.4% |
| FY2025 | ₹0Cr | ₹0Cr | 72.5% | 0.04 | 7.84 | 20.3% |
| FY2026 | ₹0Cr | ₹0Cr | 74.7% | 0.03 | 7.53 | 19.2% |
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.