DuPont Decomposition
Why does VMSTMT earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
20.1% = 1.9% × 1.85 × 5.63
Latest: FY2025
Profitability
Net Margin
1.9%
1.4% →1.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.85x
3.13x →1.85x
Revenue per ₹ of assets
Leverage
Equity Multiplier
5.63x
8.43x →5.63x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 16.7 pp over 4 years. Driven by asset turnover declining (3.13x → 1.85x), leverage falling (8.43x → 5.63x). 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 | 1.4% | 3.13 | 8.43 | 36.8% |
| FY2023 | ₹0Cr | ₹0Cr | 0.5% | 3.88 | 7.37 | 13.6% |
| FY2024 | ₹0Cr | ₹0Cr | 1.5% | 3.07 | 6.11 | 29.0% |
| FY2025 | ₹0Cr | ₹0Cr | 1.9% | 1.85 | 5.63 | 20.1% |
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.