DuPont Decomposition
Why does TMB earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
13.1% = 37.5% × 0.05 × 7.38
Latest: FY2025
Profitability
Net Margin
37.5%
31.3% →37.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.05x
0.05x →0.05x
Revenue per ₹ of assets
Leverage
Equity Multiplier
7.38x
9.91x →7.38x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 2.3 pp over 3 years. Driven by net margin improving (31.3% → 37.5%), leverage falling (9.91x → 7.38x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 31.3% | 0.05 | 9.91 | 15.4% |
| FY2023 | ₹0Cr | ₹0Cr | 37.8% | 0.05 | 8.36 | 14.9% |
| FY2025 | ₹0Cr | ₹0Cr | 37.5% | 0.05 | 7.38 | 13.1% |
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.