DuPont Decomposition
Why does RELIANCE earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
6.9% = 7.2% × 0.49 × 1.93
Latest: FY2025
Profitability
Net Margin
7.2%
9.9% →7.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.49x
0.13x →0.49x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.93x
2.09x →1.93x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 4.3 pp over 3 years. Driven by net margin declining (9.9% → 7.2%), asset turnover improving (0.13x → 0.49x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 9.9% | 0.13 | 2.09 | 2.6% |
| FY2024 | ₹0Cr | ₹0Cr | 8.8% | 0.14 | 2.21 | 2.7% |
| FY2025 | ₹0.1Cr | ₹0Cr | 7.2% | 0.49 | 1.93 | 6.9% |
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.