DuPont Decomposition
Why does TORNTPHARM earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
25.8% = 15.7% × 0.31 × 5.28
Latest: FY2026
Profitability
Net Margin
15.7%
9.2% →15.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.31x
0.64x →0.31x
Revenue per ₹ of assets
Leverage
Equity Multiplier
5.28x
2.20x →5.28x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 12.7 pp over 5 years. Driven by net margin improving (9.2% → 15.7%), asset turnover declining (0.64x → 0.31x), leverage rising (2.20x → 5.28x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 9.2% | 0.64 | 2.20 | 13.1% |
| FY2023 | ₹0Cr | ₹0Cr | 13.2% | 0.63 | 2.42 | 20.1% |
| FY2024 | ₹0Cr | ₹0Cr | 15.7% | 0.70 | 2.20 | 24.2% |
| FY2025 | ₹0Cr | ₹0Cr | 16.9% | 0.75 | 1.97 | 25.2% |
| FY2026 | ₹0Cr | ₹0Cr | 15.7% | 0.31 | 5.28 | 25.8% |
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.