DuPont Decomposition
Why does TCI earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
18.8% = 9.2% × 1.61 × 1.27
Latest: FY2025
Profitability
Net Margin
9.2%
8.4% →9.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.61x
1.98x →1.61x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.27x
1.22x →1.27x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 1.4 pp over 3 years. Driven by asset turnover declining (1.98x → 1.61x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 8.4% | 1.98 | 1.22 | 20.2% |
| FY2024 | ₹0Cr | ₹0Cr | 8.7% | 1.61 | 1.25 | 17.5% |
| FY2025 | ₹0Cr | ₹0Cr | 9.2% | 1.61 | 1.27 | 18.8% |
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.