DuPont Decomposition
Why does SOLEX earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
38.0% = 5.9% × 1.37 × 4.67
Latest: FY2026
Profitability
Net Margin
5.9%
1.4% →5.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.37x
0.99x →1.37x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.67x
2.08x →4.67x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 35.1 pp over 5 years. Driven by net margin improving (1.4% → 5.9%), asset turnover improving (0.99x → 1.37x), leverage rising (2.08x → 4.67x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 1.4% | 0.99 | 2.08 | 2.8% |
| FY2023 | ₹0Cr | ₹0Cr | 1.7% | 1.15 | 3.74 | 7.2% |
| FY2024 | ₹0Cr | ₹0Cr | 2.4% | 1.73 | 4.58 | 18.9% |
| FY2025 | ₹0Cr | ₹0Cr | 6.3% | 1.38 | 2.99 | 25.8% |
| FY2026 | ₹0Cr | ₹0Cr | 5.9% | 1.37 | 4.67 | 38.0% |
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.