DuPont Decomposition
Why does TATACHEM earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
1.0% = 1.6% × 0.39 × 1.68
Latest: FY2025
Profitability
Net Margin
1.6%
15.7% →1.6%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.39x
0.13x →0.39x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.68x
1.78x →1.68x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 2.5 pp over 3 years. Driven by net margin declining (15.7% → 1.6%), asset turnover improving (0.13x → 0.39x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 15.7% | 0.13 | 1.78 | 3.5% |
| FY2024 | ₹0Cr | ₹-0Cr | -24.2% | 0.09 | 1.65 | -3.8% |
| FY2025 | ₹0Cr | ₹0Cr | 1.6% | 0.39 | 1.68 | 1.0% |
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.