DuPont Decomposition
Why does SELMC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
-125.3% = -34.7% × 0.44 × 8.25
Latest: FY2023
Profitability
Net Margin
-34.7%
-31.3% →-34.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.44x
0.30x →0.44x
Revenue per ₹ of assets
Leverage
Equity Multiplier
8.25x
5.25x →8.25x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 75.5 pp over 2 years. Driven by net margin declining (-31.3% → -34.7%), asset turnover improving (0.30x → 0.44x), leverage rising (5.25x → 8.25x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 2 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹-0Cr | -31.3% | 0.30 | 5.25 | -49.8% |
| FY2023 | ₹0Cr | ₹-0Cr | -34.7% | 0.44 | 8.25 | -125.3% |
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.