DuPont Decomposition
Why does REDTAPE earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
21.6% = 8.4% × 0.91 × 2.82
Latest: FY2025
Profitability
Net Margin
8.4%
9.6% →8.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.91x
0.37x →0.91x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.82x
2.46x →2.82x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 12.9 pp over 4 years. Driven by net margin declining (9.6% → 8.4%), asset turnover improving (0.37x → 0.91x), leverage rising (2.46x → 2.82x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 9.6% | 0.37 | 2.46 | 8.7% |
| FY2023 | ₹0Cr | ₹0Cr | 9.7% | 1.18 | 2.60 | 29.8% |
| FY2024 | ₹0Cr | ₹0Cr | 8.1% | 0.32 | 2.45 | 6.3% |
| FY2025 | ₹0Cr | ₹0Cr | 8.4% | 0.91 | 2.82 | 21.6% |
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.