DuPont Decomposition
Why does VARROC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
3.8% = 0.8% × 1.71 × 2.92
Latest: FY2025
Profitability
Net Margin
0.8%
2.4% →0.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.71x
0.37x →1.71x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.92x
4.73x →2.92x
Assets funded by equity vs debt
Trend Analysis
ROE stable at ~4%. Driven by net margin declining (2.4% → 0.8%), asset turnover improving (0.37x → 1.71x), leverage falling (4.73x → 2.92x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 2.4% | 0.37 | 4.73 | 4.1% |
| FY2024 | ₹0Cr | ₹0Cr | 3.0% | 0.43 | 3.05 | 3.9% |
| FY2025 | ₹0Cr | ₹0Cr | 0.8% | 1.71 | 2.92 | 3.8% |
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.