DuPont Decomposition
Why does SRF earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
9.9% = 8.7% × 0.67 × 1.71
Latest: FY2025
Profitability
Net Margin
8.7%
18.5% →8.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.67x
0.20x →0.67x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.71x
1.68x →1.71x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 3.6 pp over 3 years. Driven by net margin declining (18.5% → 8.7%), asset turnover improving (0.20x → 0.67x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 18.5% | 0.20 | 1.68 | 6.3% |
| FY2024 | ₹0Cr | ₹0Cr | 11.8% | 0.17 | 1.78 | 3.7% |
| FY2025 | ₹0Cr | ₹0Cr | 8.7% | 0.67 | 1.71 | 9.9% |
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.