DuPont Decomposition
Why does TATASTEEL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.6% = 4.7% × 0.76 × 2.95
Latest: FY2026
Profitability
Net Margin
4.7%
16.6% →4.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.76x
0.85x →0.76x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.95x
2.49x →2.95x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 24.5 pp over 5 years. Driven by net margin declining (16.6% → 4.7%), leverage rising (2.49x → 2.95x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 16.6% | 0.85 | 2.49 | 35.1% |
| FY2023 | ₹0Cr | ₹0Cr | 3.6% | 0.84 | 2.79 | 8.5% |
| FY2024 | ₹0Cr | ₹-0Cr | -1.9% | 0.83 | 2.97 | -4.8% |
| FY2025 | ₹0Cr | ₹0Cr | 1.6% | 0.78 | 3.06 | 3.8% |
| FY2026 | ₹0Cr | ₹0Cr | 4.7% | 0.76 | 2.95 | 10.6% |
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.