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
23.7% = 6.1% × 0.77 × 5.08
Latest: FY2025
Profitability
Net Margin
6.1%
4.2% →6.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.77x
0.23x →0.77x
Revenue per ₹ of assets
Leverage
Equity Multiplier
5.08x
6.40x →5.08x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 17.6 pp over 3 years. Driven by net margin improving (4.2% → 6.1%), asset turnover improving (0.23x → 0.77x), leverage falling (6.40x → 5.08x). 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 | 4.2% | 0.23 | 6.40 | 6.1% |
| FY2024 | ₹0Cr | ₹0Cr | 4.1% | 0.24 | 6.22 | 6.1% |
| FY2025 | ₹0Cr | ₹0Cr | 6.1% | 0.77 | 5.08 | 23.7% |
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.