DuPont Decomposition
Why does TCS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
45.4% = 18.4% × 1.46 × 1.68
Latest: FY2026
Profitability
Net Margin
18.4%
19.3% →18.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.46x
0.41x →1.46x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.68x
1.59x →1.68x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 32.7 pp over 4 years. Driven by asset turnover improving (0.41x → 1.46x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 19.3% | 0.41 | 1.59 | 12.7% |
| FY2024 | ₹0Cr | ₹0Cr | 22.1% | 0.43 | 1.68 | 15.8% |
| FY2025 | ₹0Cr | ₹0Cr | 19.0% | 1.60 | 1.67 | 50.7% |
| FY2026 | ₹0Cr | ₹0Cr | 18.4% | 1.46 | 1.68 | 45.4% |
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.