DuPont Decomposition
Why does SMSPHARMA earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.8% = 8.9% × 0.68 × 1.80
Latest: FY2025
Profitability
Net Margin
8.9%
1.2% →8.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.68x
0.59x →0.68x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.80x
1.91x →1.80x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 9.5 pp over 3 years. Driven by net margin improving (1.2% → 8.9%).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 1.2% | 0.59 | 1.91 | 1.4% |
| FY2024 | ₹0Cr | ₹0Cr | 7.0% | 0.68 | 1.93 | 9.3% |
| FY2025 | ₹0Cr | ₹0Cr | 8.9% | 0.68 | 1.80 | 10.8% |
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.