DuPont Decomposition
Why does RMC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
29.4% = 9.9% × 1.18 × 2.51
Latest: FY2025
Profitability
Net Margin
9.9%
1.5% →9.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.18x
0.47x →1.18x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.51x
2.91x →2.51x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 27.3 pp over 4 years. Driven by net margin improving (1.5% → 9.9%), asset turnover improving (0.47x → 1.18x), leverage falling (2.91x → 2.51x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 1.5% | 0.47 | 2.91 | 2.0% |
| FY2023 | ₹0Cr | ₹0Cr | 9.4% | 1.07 | 2.55 | 25.7% |
| FY2024 | ₹0Cr | ₹0Cr | 8.7% | 1.10 | 2.57 | 24.6% |
| FY2025 | ₹0Cr | ₹0Cr | 9.9% | 1.18 | 2.51 | 29.4% |
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.