DuPont Decomposition
Why does TVSHLTD earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
11.5% = 2.7% × 0.80 × 5.33
Latest: FY2025
Profitability
Net Margin
2.7%
3.8% →2.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.80x
0.21x →0.80x
Revenue per ₹ of assets
Leverage
Equity Multiplier
5.33x
12.14x →5.33x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 1.5 pp over 3 years. Driven by net margin declining (3.8% → 2.7%), asset turnover improving (0.21x → 0.80x), leverage falling (12.14x → 5.33x). 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 |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 3.8% | 0.21 | 12.14 | 10.0% |
| FY2024 | ₹0Cr | ₹0Cr | 4.6% | 0.23 | 6.40 | 6.6% |
| FY2025 | ₹0Cr | ₹0Cr | 2.7% | 0.80 | 5.33 | 11.5% |
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.