DuPont Decomposition
Why does SONATSOFTW earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
24.4% = 4.3% × 2.10 × 2.67
Latest: FY2026
Profitability
Net Margin
4.3%
6.8% →4.3%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
2.10x
2.17x →2.10x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.67x
2.33x →2.67x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 9.9 pp over 5 years. Driven by net margin declining (6.8% → 4.3%), leverage rising (2.33x → 2.67x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 6.8% | 2.17 | 2.33 | 34.3% |
| FY2023 | ₹0Cr | ₹0Cr | 6.1% | 1.71 | 3.35 | 34.7% |
| FY2024 | ₹0Cr | ₹0Cr | 3.6% | 1.67 | 3.66 | 21.9% |
| FY2025 | ₹0Cr | ₹0Cr | 4.2% | 2.14 | 2.79 | 24.9% |
| FY2026 | ₹0Cr | ₹0Cr | 4.3% | 2.10 | 2.67 | 24.4% |
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.