DuPont Decomposition
Why does THERMAX earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
12.8% = 6.2% × 0.85 × 2.44
Latest: FY2025
Profitability
Net Margin
6.2%
5.6% →6.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.85x
1.31x →0.85x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.44x
1.91x →2.44x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 1.2 pp over 3 years. Driven by asset turnover declining (1.31x → 0.85x), leverage rising (1.91x → 2.44x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 5.6% | 1.31 | 1.91 | 14.0% |
| FY2024 | ₹0Cr | ₹0Cr | 7.0% | 0.91 | 2.29 | 14.5% |
| FY2025 | ₹0Cr | ₹0Cr | 6.2% | 0.85 | 2.44 | 12.8% |
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.