DuPont Decomposition
Why does TARC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
-22.2% = -830.7% × 0.01 × 4.04
Latest: FY2025
Profitability
Net Margin
-830.7%
1.1% →-830.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.01x
0.04x →0.01x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.04x
2.34x →4.04x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 22.3 pp over 3 years. Driven by net margin declining (1.1% → -830.7%), leverage rising (2.34x → 4.04x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 1.1% | 0.04 | 2.34 | 0.1% |
| FY2024 | ₹0.1Cr | ₹-0.5Cr | -545.5% | 0.00 | 2.72 | -4.1% |
| FY2025 | ₹0Cr | ₹-0Cr | -830.7% | 0.01 | 4.04 | -22.2% |
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.