DuPont Decomposition
Why does SALONA earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
3.8% = 0.5% × 1.73 × 4.29
Latest: FY2025
Profitability
Net Margin
0.5%
3.2% →0.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.73x
2.68x →1.73x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.29x
3.98x →4.29x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 30.8 pp over 4 years. Driven by net margin declining (3.2% → 0.5%), asset turnover declining (2.68x → 1.73x), leverage rising (3.98x → 4.29x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 3.2% | 2.68 | 3.98 | 34.6% |
| FY2023 | ₹0Cr | ₹0Cr | 4.0% | 1.63 | 3.64 | 23.7% |
| FY2024 | ₹0Cr | ₹0Cr | 0.9% | 1.86 | 4.56 | 7.7% |
| FY2025 | ₹0Cr | ₹0Cr | 0.5% | 1.73 | 4.29 | 3.8% |
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.