DuPont Decomposition
Why does RML earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
5.6% = 1.1% × 1.48 × 3.38
Latest: FY2025
Profitability
Net Margin
1.1%
1.5% →1.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.48x
0.46x →1.48x
Revenue per ₹ of assets
Leverage
Equity Multiplier
3.38x
5.58x →3.38x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 1.7 pp over 3 years. Driven by asset turnover improving (0.46x → 1.48x), leverage falling (5.58x → 3.38x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0.1Cr | ₹0Cr | 1.5% | 0.46 | 5.58 | 4.0% |
| FY2024 | ₹0Cr | ₹-0Cr | -1.8% | 0.38 | 5.35 | -3.7% |
| FY2025 | ₹0Cr | ₹0Cr | 1.1% | 1.48 | 3.38 | 5.6% |
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.