DuPont Decomposition
Why does VRAJ earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
11.1% = 9.3% × 1.14 × 1.05
Latest: FY2025
Profitability
Net Margin
9.3%
6.9% →9.3%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.14x
2.75x →1.14x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.05x
1.73x →1.05x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 21.8 pp over 4 years. Driven by net margin improving (6.9% → 9.3%), asset turnover declining (2.75x → 1.14x), leverage falling (1.73x → 1.05x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 6.9% | 2.75 | 1.73 | 32.9% |
| FY2023 | ₹0Cr | ₹0Cr | 10.5% | 2.69 | 1.36 | 38.3% |
| FY2024 | ₹0Cr | ₹0Cr | 13.7% | 1.50 | 1.40 | 28.7% |
| FY2025 | ₹0Cr | ₹0Cr | 9.3% | 1.14 | 1.05 | 11.1% |
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.