DuPont Decomposition
Why does IDBI earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
12.4% = 42.4% × 0.04 × 6.70
Latest: FY2025
Profitability
Net Margin
42.4%
19.6% →42.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.04x
0.04x →0.04x
Revenue per ₹ of assets
Leverage
Equity Multiplier
6.70x
7.11x →6.70x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 6.4 pp over 4 years. Driven by net margin improving (19.6% → 42.4%), leverage falling (7.11x → 6.70x). 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 | 19.6% | 0.04 | 7.11 | 6.0% |
| FY2023 | ₹0Cr | ₹0Cr | 24.7% | 0.05 | 7.16 | 8.0% |
| FY2024 | ₹0Cr | ₹0Cr | 33.6% | 0.05 | 7.14 | 11.3% |
| FY2025 | ₹0Cr | ₹0Cr | 42.4% | 0.04 | 6.70 | 12.4% |
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.