DuPont Decomposition
Why does RSL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
26.2% = 4.3% × 2.21 × 2.77
Latest: FY2025
Profitability
Net Margin
4.3%
2.5% →4.3%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
2.21x
3.18x →2.21x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.77x
3.66x →2.77x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 3.4 pp over 3 years. Driven by net margin improving (2.5% → 4.3%), asset turnover declining (3.18x → 2.21x), leverage falling (3.66x → 2.77x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 2.5% | 3.18 | 3.66 | 29.6% |
| FY2024 | ₹0Cr | ₹0Cr | 3.5% | 2.80 | 2.89 | 28.2% |
| FY2025 | ₹0Cr | ₹0Cr | 4.3% | 2.21 | 2.77 | 26.2% |
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.