DuPont Decomposition
Why does SFL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
4.9% = 4.2% × 0.75 × 1.57
Latest: FY2026
Profitability
Net Margin
4.2%
7.6% →4.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.75x
1.21x →0.75x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.57x
1.70x →1.57x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 10.7 pp over 5 years. Driven by net margin declining (7.6% → 4.2%), asset turnover declining (1.21x → 0.75x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 7.6% | 1.21 | 1.70 | 15.6% |
| FY2023 | ₹0Cr | ₹0Cr | 6.9% | 1.06 | 1.70 | 12.4% |
| FY2024 | ₹0Cr | ₹0Cr | 6.1% | 0.56 | 1.83 | 6.3% |
| FY2025 | ₹0Cr | ₹0Cr | 2.6% | 0.63 | 1.80 | 2.9% |
| FY2026 | ₹0Cr | ₹0Cr | 4.2% | 0.75 | 1.57 | 4.9% |
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.