DuPont Decomposition
Why does VGL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
51.9% = 43.8% × 0.21 × 5.72
Latest: FY2025
Profitability
Net Margin
43.8%
-9.8% →43.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.21x
0.67x →0.21x
Revenue per ₹ of assets
Leverage
Equity Multiplier
5.72x
4.98x →5.72x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 84.7 pp over 4 years. Driven by net margin improving (-9.8% → 43.8%), asset turnover declining (0.67x → 0.21x), leverage rising (4.98x → 5.72x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹-0Cr | -9.8% | 0.67 | 4.98 | -32.8% |
| FY2023 | ₹0Cr | ₹-0Cr | -24.9% | 0.50 | 8.48 | -105.9% |
| FY2024 | ₹0Cr | ₹-0Cr | -52.7% | 0.19 | 25.50 | -259.4% |
| FY2025 | ₹0Cr | ₹0Cr | 43.8% | 0.21 | 5.72 | 51.9% |
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.