DuPont Decomposition
Why does SPAL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
11.1% = 7.2% × 0.91 × 1.70
Latest: FY2025
Profitability
Net Margin
7.2%
10.3% →7.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.91x
0.77x →0.91x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.70x
1.66x →1.70x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 2.2 pp over 4 years. Driven by net margin declining (10.3% → 7.2%), asset turnover improving (0.77x → 0.91x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 10.3% | 0.77 | 1.66 | 13.3% |
| FY2023 | ₹0Cr | ₹0Cr | 8.0% | 0.94 | 1.63 | 12.3% |
| FY2024 | ₹0Cr | ₹0Cr | 8.7% | 0.90 | 1.49 | 11.7% |
| FY2025 | ₹0Cr | ₹0Cr | 7.2% | 0.91 | 1.70 | 11.1% |
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.