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
24.9% = 4.2% × 2.13 × 2.79
Latest: FY2025
Profitability
Net Margin
4.2%
6.0% →4.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
2.13x
0.44x →2.13x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.79x
3.35x →2.79x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 16.1 pp over 3 years. Driven by net margin declining (6.0% → 4.2%), asset turnover improving (0.44x → 2.13x), leverage falling (3.35x → 2.79x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 6.0% | 0.44 | 3.35 | 8.8% |
| FY2024 | ₹0Cr | ₹0Cr | 5.0% | 0.43 | 3.66 | 7.8% |
| FY2025 | ₹0Cr | ₹0Cr | 4.2% | 2.13 | 2.79 | 24.9% |
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.