DuPont Decomposition
Why does VARDHACRLC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
5.0% = 4.2% × 0.81 × 1.46
Latest: FY2025
Profitability
Net Margin
4.2%
4.9% →4.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.81x
0.24x →0.81x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.46x
1.39x →1.46x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 3.4 pp over 3 years. Driven by asset turnover improving (0.24x → 0.81x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 4.9% | 0.24 | 1.39 | 1.6% |
| FY2024 | ₹0Cr | ₹0Cr | 7.7% | 0.21 | 1.35 | 2.2% |
| FY2025 | ₹0Cr | ₹0Cr | 4.2% | 0.81 | 1.46 | 5.0% |
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.