DuPont Decomposition
Why does VEDL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
35.0% = 22.7% × 0.33 × 4.70
Latest: FY2026
Profitability
Net Margin
22.7%
14.3% →22.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.33x
0.66x →0.33x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.70x
3.03x →4.70x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 6.3 pp over 5 years. Driven by net margin improving (14.3% → 22.7%), asset turnover declining (0.66x → 0.33x), leverage rising (3.03x → 4.70x). 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 | 14.3% | 0.66 | 3.03 | 28.8% |
| FY2023 | ₹0Cr | ₹0Cr | 7.3% | 0.74 | 4.96 | 26.8% |
| FY2024 | ₹0Cr | ₹0Cr | 3.0% | 0.74 | 6.21 | 13.8% |
| FY2025 | ₹0Cr | ₹0Cr | 24.3% | 0.30 | 5.31 | 39.1% |
| FY2026 | ₹0Cr | ₹0Cr | 22.7% | 0.33 | 4.70 | 35.0% |
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.