DuPont Decomposition
Why does SMCGLOBAL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
11.9% = 9.8% × 0.30 × 4.03
Latest: FY2025
Profitability
Net Margin
9.8%
7.2% →9.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.30x
0.09x →0.30x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.03x
3.54x →4.03x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 9.6 pp over 3 years. Driven by net margin improving (7.2% → 9.8%), asset turnover improving (0.09x → 0.30x), leverage rising (3.54x → 4.03x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 7.2% | 0.09 | 3.54 | 2.3% |
| FY2024 | ₹0Cr | ₹0Cr | 13.0% | 0.11 | 4.33 | 6.0% |
| FY2025 | ₹0Cr | ₹0Cr | 9.8% | 0.30 | 4.03 | 11.9% |
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.