DuPont Decomposition
Why does SEL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
14.7% = 5.0% × 0.83 × 3.57
Latest: FY2025
Profitability
Net Margin
5.0%
7.2% →5.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.83x
1.44x →0.83x
Revenue per ₹ of assets
Leverage
Equity Multiplier
3.57x
3.52x →3.57x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 22.1 pp over 4 years. Driven by net margin declining (7.2% → 5.0%), asset turnover declining (1.44x → 0.83x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 7.2% | 1.44 | 3.52 | 36.8% |
| FY2023 | ₹0Cr | ₹0Cr | 4.3% | 1.71 | 3.17 | 23.2% |
| FY2024 | ₹0Cr | ₹0Cr | 6.1% | 0.96 | 1.93 | 11.2% |
| FY2025 | ₹0Cr | ₹0Cr | 5.0% | 0.83 | 3.57 | 14.7% |
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.