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
27.9% = 9.9% × 0.74 × 3.78
Latest: FY2025
Profitability
Net Margin
9.9%
7.3% →9.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.74x
0.74x →0.74x
Revenue per ₹ of assets
Leverage
Equity Multiplier
3.78x
4.98x →3.78x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 1.1 pp over 3 years. Driven by net margin improving (7.3% → 9.9%), leverage falling (4.98x → 3.78x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 7.3% | 0.74 | 4.98 | 26.8% |
| FY2024 | ₹0Cr | ₹0Cr | 1.6% | 0.74 | 6.21 | 7.4% |
| FY2025 | ₹0Cr | ₹0Cr | 9.9% | 0.74 | 3.78 | 27.9% |
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.