DuPont Decomposition
Why does SRM earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
20.0% = 10.4% × 1.30 × 1.48
Latest: FY2025
Profitability
Net Margin
10.4%
6.7% →10.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.30x
2.19x →1.30x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.48x
2.71x →1.48x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 19.6 pp over 4 years. Driven by net margin improving (6.7% → 10.4%), asset turnover declining (2.19x → 1.30x), leverage falling (2.71x → 1.48x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 6.7% | 2.19 | 2.71 | 39.5% |
| FY2023 | ₹0Cr | ₹0Cr | 6.2% | 2.21 | 2.15 | 29.6% |
| FY2024 | ₹0Cr | ₹0Cr | 6.4% | 0.47 | 1.84 | 5.5% |
| FY2025 | ₹0Cr | ₹0Cr | 10.4% | 1.30 | 1.48 | 20.0% |
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.