DuPont Decomposition
Why does TVSMOTOR earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
31.6% = 5.4% × 0.99 × 5.91
Latest: FY2026
Profitability
Net Margin
5.4%
3.5% →5.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.99x
0.79x →0.99x
Revenue per ₹ of assets
Leverage
Equity Multiplier
5.91x
6.17x →5.91x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 14.4 pp over 5 years. Driven by net margin improving (3.5% → 5.4%), asset turnover improving (0.79x → 0.99x), leverage falling (6.17x → 5.91x). 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 | 3.5% | 0.79 | 6.17 | 17.2% |
| FY2023 | ₹0Cr | ₹0Cr | 4.8% | 0.78 | 6.40 | 24.1% |
| FY2024 | ₹0Cr | ₹0Cr | 5.2% | 0.77 | 6.22 | 24.9% |
| FY2025 | ₹0Cr | ₹0Cr | 5.1% | 0.92 | 5.64 | 26.3% |
| FY2026 | ₹0Cr | ₹0Cr | 5.4% | 0.99 | 5.91 | 31.6% |
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.