DuPont Decomposition
Why does IRFC earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
12.3% = 25.7% × 0.05 × 9.10
Latest: FY2026
Profitability
Net Margin
25.7%
30.0% →25.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.05x
0.05x →0.05x
Revenue per ₹ of assets
Leverage
Equity Multiplier
9.10x
11.13x →9.10x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 2.7 pp over 5 years. Driven by net margin declining (30.0% → 25.7%), leverage falling (11.13x → 9.10x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 30.0% | 0.05 | 11.13 | 15.1% |
| FY2023 | ₹0Cr | ₹0Cr | 26.1% | 0.05 | 10.97 | 13.8% |
| FY2024 | ₹0Cr | ₹0Cr | 24.2% | 0.05 | 9.86 | 13.0% |
| FY2025 | ₹0Cr | ₹0Cr | 23.9% | 0.06 | 9.28 | 12.3% |
| FY2026 | ₹0Cr | ₹0Cr | 25.7% | 0.05 | 9.10 | 12.3% |
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.