DuPont Decomposition
Why does IDFCFIRSTB earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
3.4% = 5.5% × 0.07 × 8.43
Latest: FY2026
Profitability
Net Margin
5.5%
14.4% →5.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.07x
0.07x →0.07x
Revenue per ₹ of assets
Leverage
Equity Multiplier
8.43x
9.28x →8.43x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 6.2 pp over 4 years. Driven by net margin declining (14.4% → 5.5%), leverage falling (9.28x → 8.43x). 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 |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 14.4% | 0.07 | 9.28 | 9.6% |
| FY2024 | ₹0Cr | ₹0Cr | 13.1% | 0.08 | 9.18 | 9.1% |
| FY2025 | ₹0Cr | ₹0Cr | 5.7% | 0.08 | 9.01 | 3.9% |
| FY2026 | ₹0Cr | ₹0Cr | 5.5% | 0.07 | 8.43 | 3.4% |
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.