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
12.6% = 2.5% × 1.82 × 2.74
Latest: FY2026
Profitability
Net Margin
2.5%
-19.2% →2.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.82x
0.53x →1.82x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.74x
5.53x →2.74x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 68.5 pp over 5 years. Driven by net margin improving (-19.2% → 2.5%), asset turnover improving (0.53x → 1.82x), leverage falling (5.53x → 2.74x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹-0Cr | -19.2% | 0.53 | 5.53 | -55.8% |
| FY2023 | ₹0Cr | ₹-0Cr | -12.1% | 1.47 | 4.73 | -84.0% |
| FY2024 | ₹0Cr | ₹0Cr | 7.2% | 1.61 | 3.05 | 35.1% |
| FY2025 | ₹0Cr | ₹0Cr | 0.8% | 1.75 | 2.99 | 3.9% |
| FY2026 | ₹0Cr | ₹0Cr | 2.5% | 1.82 | 2.74 | 12.6% |
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.