DuPont Decomposition
Why does RKEC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.6% = 4.8% × 0.73 × 3.08
Latest: FY2025
Profitability
Net Margin
4.8%
3.4% →4.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.73x
0.57x →0.73x
Revenue per ₹ of assets
Leverage
Equity Multiplier
3.08x
2.68x →3.08x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 5.4 pp over 4 years. Driven by net margin improving (3.4% → 4.8%), asset turnover improving (0.57x → 0.73x), leverage rising (2.68x → 3.08x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 3.4% | 0.57 | 2.68 | 5.2% |
| FY2023 | ₹0Cr | ₹0Cr | 4.5% | 0.63 | 2.96 | 8.4% |
| FY2024 | ₹0Cr | ₹0Cr | 5.9% | 0.72 | 2.76 | 11.8% |
| FY2025 | ₹0Cr | ₹0Cr | 4.8% | 0.73 | 3.08 | 10.6% |
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.