DuPont Decomposition
Why does RITES earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
14.0% = 17.6% × 0.36 × 2.23
Latest: FY2025
Profitability
Net Margin
17.6%
20.2% →17.6%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.36x
0.11x →0.36x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.23x
2.29x →2.23x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 8.7 pp over 3 years. Driven by net margin declining (20.2% → 17.6%), asset turnover improving (0.11x → 0.36x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 20.2% | 0.11 | 2.29 | 5.3% |
| FY2024 | ₹0Cr | ₹0Cr | 20.3% | 0.11 | 2.17 | 4.9% |
| FY2025 | ₹0Cr | ₹0Cr | 17.6% | 0.36 | 2.23 | 14.0% |
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.