Determinants of RoE using DuPont Analysis -

A Study of BSE 500 companies

M. Sriram
Associate Professor - Finance
SDMIMD, Mysuru
msriram@sdmimd.ac.in

Shri Dharmasthala Manjunatheshwara

Research Center for Management Studies (SDM RCMS)
SDM Institute for Management Development (SDMIMD)
Mysuru - 570 011
 Applied Research Project, 2020

(C) Applied Research Project 2020, SDM Research Center for Management Studies (SDM RCMS), SDMIMD, Mysuru

Note:

All views expressed in this work are that of the author(s). SDM RCMS does not take any responsibility for the
views expressed herein by the author(s).

No part of this publication can be reproduced or transmitted in any form or by any means, without prior
permission of the publisher.
 Preface
Research Center for Management Studies (RCMS) at SDMIMD has endeavoured to promote
research in the field of management education in the Institute, in various ways. The Research
Centre has encouraged faculty and students to actively take part in research activities jointly,
collate and disseminate findings of the research activities through various types of projects
to contribute to the body of knowledge to the academic fraternity in general, and management
education in particular.

In this direction, keeping in line with the philosophy of promoting active research in the field
of management to capture live situations and issues, the Research Center has taken a unique
initiative to sponsor and encourage faculty members to carry out Applied Research Projects
in various areas of management.

The duration of these projects is typically between four to twelve months. After completion
of each project, after peer review, a publication is taken out, by the institute. The projects
help the faculty members, and the students, who work under the supervision of the faculty
members for these projects, to identify issues of current importance in the field of
management in various sectors. Data is collected mostly through primary research, through
interviews and field study.

The institute takes into account the time and resources required by a faculty member to
carry out such projects, and, fully sponsors them to cover the various costs of the project
work (for data collection, travel, etc), thereby providing a unique opportunity to the two
most important institutional stakeholders (faculty and students) to enrich their knowledge
by extending their academic activities, outside the classroom learning situation, in the real
world.

From the academic viewpoint, these projects provide a unique opportunity to the faculty
and the engaging students to get a first-hand experience in knowing problems of targeted
organizations or sectors on a face to face basis, thereby, helping in knowledge creation and
its transfer, adding to the overall process of learning in a practical manner, with application
of knowledge, as the focus of learning pedagogy, which is vital in management education.

Dr. Mousumi Sengupta

Chairperson, SDM RCMS
Applied Research Project, 2020
 Acknowledgement

I express my sincere thanks to the Management of Shri Dharmasthala Manjunatheshwara Institute

for Management Development (SDMIMD), Mysuru for permitting me to undergo this applied
research work. I am very much indebted to Dr.N.R.Parasuraman, Professor-Finance and Director,
SDMIMD for all the guidance and advice given to me in undertaking this applied research work.
His valuable guidance, methodical supervision and constant encouragement helped me in the
accomplishment of work.

I gracefully acknowledge the services of II year PGDM students, Hari Shankar (PGDM No.17042),
Kartik Shivakumar (PGDM No.17014) , Girish N (PGDM No.17011) and Pavan V (PGDM No.17124)
for helping me in the initial stages of my research work by generating the required data for the
analysis and final preparation of the report. Also, I place on record my gratitude to
Mr.G.Gurumurthy, Customer Support-Finance, Capital Market Publishers India Pvt. Ltd (Capital
Line Data Base), Bengaluru for clarifying all the queries relating to my research work.

My heartfelt thanks to all those who supported and encouraged me in completing this work on
time.

Dr. M. Sriram
Applied Research Project, 2020
 Table of Contents

Executive Summary .............................................................................................................................................................................. I

Introduction ............................................................................................................................................................................................. 1

Review of Literature ............................................................................................................................................................................. 1

Data and Methodology ...................................................................................................................................................................... 2

Analysis and Interpretation ............................................................................................................................................................... 3

Findings and Discussion ..................................................................................................................................................................... 4

References ............................................................................................................................................................................................... 5

Appendix .................................................................................................................................................................................................. 7
Applied Research Project, 2020
 Executive Summar y

The study on determinants of RoE (Return on Equity) was undertaken for BSE 500 companies
for a period of three years viz., 2015-2018. DuPont model was used for the study.A sample of
371 companies were finally selected for the analysis after filtering the companies for incomplete
data. Banking and finance companies were not considered for the study. The dependent variable
was return on equity and the independent variables were profit margin (PAT/Sales), equity
multiplier (TA/NW) and asset turnover (Sales/Total assets). All the three variables were found to
be significantly influencing return on equity. The study further identified top 50 companies for
all the three years. This was based on ranking companies according to RoE and arranging
companies in descending order. The top consistent performers for all the three years were
grouped and the rest was another group. For the top performers, the results based on pooled
regression identified all the three variables significantly influencing return on equity. Profit margin
being the most significant variable from among the three. Similar analysis for the other group
identified only two variables viz., equity multiplier and asset turnover were the significant variables
determining return on equity. Profit margin being the variable whose influence was statistically
insignificant. The study found that profit margin was the most significant variable which
differentiated top performers from the rest of the companies.

Keywords: profit margin, equity multiplier, BSE 500, asset turnover, DuPont

JEL Classification: G0, G1 and G3

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Applied Research Project, 2020
Determinants of RoE using DuPont Analysis -
A Study of BSE 500 companies

1. Introduction- The paper is structured as follows- Section 2 provides

literature review, Section 3 on Data and Methodology,
The analysis of a company’s performance is vital to
Section 4 on Analysis and Interpretation and Section
the stakeholders as their decision to invest their funds
5 is the findings and discussion.
into company’s assets depends on the performance
(Penman,2007). A company’s financial performance 2. Review of Literature
is assessed by its stakeholders using different
Porter (2005) in his study identified that investment
methods. One of the methods used by the investing
returns are highly correlated with the industry
fraternity/practicing managers is ratio analysis- a
portfolio returns. The author found that the portion
simple tool which analyses the relationship between
of investment returns orthogonal to equity returns
any two variables drawn from the financial statements
was positively associated with changes in profitability.
of a company. Different ratios are used for different
Negative association was also witnessed between
purposes and the type of ratio to be analysed and
lagged investment returns and equity.
interpreted depends upon the categor y the
Leisz&Maranville., (2008) in their study described that
stakeholder belongs to. One of the ratios widely used
a simple calculation is required for The Du Pont model
by the shareholders of a company to measure the
of Profitability analysis. According to them, these
return earned by them is, Return on Equity (RoE).
calculations can lead to understanding the financial
Assessing a company based on the performance of
per formance and the managers of the firms
shareholders equity reflects RoE (Fabozzi &Peterson.,
irrespective of size can take precise actions that will
2003). What determines RoE is a subject for research
lead to higher profitability and returns. The authors
among academicians and researchers and lot of
were of the view that the components of ROE also
studies have gone into to analyse the factors
allow even small business managers too taker prudent
influencing RoE.
financial decisions which will in turn provide a positive
One of the most widely used model to estimate RoE impact on the return to firms’ owners.
is Du Pont analysis. According to Du Pont analysis, Circiumaru&Siminica, (2010) studied a select sample
RoE is a function of RoA (Return on Assets) and of Roman companies to see whether the return on
Leverage (The proxy variable being Equity Multiplier) sales (ROS), the asset turnover and the financial
[Narayanaswamy,2017]. RoE may var y across leverage have joint impact return on equity (ROE)
companies in each period based on a definite set of using regression analysis. It was found that ROS did
specifications (De La Bruslerie,2006). Additionally, RoE not impact RoE, though both the variables were
may also vary across time periods for the same correlated. The results of Kim&Kim, (2010) found that
company based upon the economic context in which there is a significant short-term relationship between
the company operates Jaba, equity returns and equity fund flows. They employed
Chirianu,Balan&Roman.,(2017). The objective of the dividend yield effect and also found that significant
present study is to select the top 50 companies from relationship among the three variables. The authors
samples selected for the study. The top 50 companies used Granger Causality test to analyse the results.
from each year is selected based on RoE arranged in Khare&Rizwi (2011) had analysed the important
descending order. Once the top 50 companies are variables that impacts debt equity ratio of BSE-100
identified, all those companies which have consistently companies and had also examined the applicability
been in the list is formed as a group. The rest of the of pecking order theories for the companies. The study
companies are formed another group. The study found that profit margins and ratio of total
would also like to explore the variable(s) which depreciation to total assets were the most significant
differentiates between the consistent group and the factors which determined capital structure decision
rest in determining the return on equity.
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 Applied Research Project, 2020

of companies. Pecking order theory was found to be factors ciz., profitability, tangibility, size of the firm had
applicable to the companies. effect on the capital structure decision. The F statistic
had confirmed the model with the above variables to
Kabajeh, AlNu’aimat&Dahmash., (2012) examined a
have more predictive power and explained more than
small sample of companies across five years and
the ‘intercept only’ model.
concluded that a positive relationship between the
ROA, ROE, ROI and share prices. Nunes&Viveiros., 3. Data and Methodology-
(2012) in their study on SMEs found that age is an
important factor affecting profitability. In addition to 3.1 About S&P BSE Sensex and Sample Selection-
age, they also identified size, liquidity and long-term Bombay Stock Exchange ltd constructed a new index,
debt as other factors positively affecting profitability. christened BSE 500 index with effect from 9
Petcharabul&Romprasert., (2014) analysed August,1999. BSE 500 represents 93% of the total
technology stocks listed in Thailand Stock Exchange market capitalization on BSE. BSE 500 index covers
by considering variables such as current ratio, debt- all the 20 major sectors in the economy. . From
to-equity ratio, inventory turnover, return on equity September 2005, the index is calculated on ‘free float
and price earnings ratios. The results indicate that only market capitalization methodology’. Free float market
ROE and PE were related to stock returns. The study capitalization methodology is widely followed index
employed OLS regression analysis. In their study, construction across major global indices.
Majed, Ahmed &Dhamash (2012) were of the view
A sample of 371 companies were selected for the
that of ROA, ROE and ROI were positively associated
study. The banking and housing finance companies
with share prices. The authors tried to identify the
where not considered for the analysis. This is because
effect of RoA, RoE and RoI individually on share price
banking companies have different repor ting
and concluded that only RoA and RoI positive
requirements and assessment parameters. The name
relationship with share price. Mohapatra, Acharya &
of the companies is included in the appendix.
Mahapatra (2013), had analysed the literature on
determinants of share price in India. They found that 3.2 Data and Period of Study-
analysing share price behaviour is a complicated
issued and according to them, the markets were found The data have been sourced from www.capitaline.com
to be with imperfections. Because of which identifying . It is a digital corporate database of more than 35000
factors determining share price were a difficult listed and unlisted Indian companies. The database
proposition. Jaba, Chirianu,Balan&Roman.,(2017) has all the necessary financial details required for the
analysed the financial performance of companies present study. The study is based on secondary data
listed in Bucharest Stock Exchange using panel data and the period of study is between 2015-2018, 5 years.
analysis. The authors provided a theoretical
3.3 Model Specification
background and applied fixed as well as random effect
models to explain variation in RoE. Jahan(2017) had The following is the OLS regression model in the
studied the determinants of banks profitability in context of panel data. The model is called pooled
Bangladesh. The study was conducted on a select set regression model.
of commercial banks. The study found that profitability
YRoE it=a1+b1XRoAit+b2XEmit+eit —————(1)
of the banks was determined by operational efficiency,
asset size and the association were found to be Where I stands for ith cross-sectional unit or observation
( in this case, a
statistically significant. Santosh &Bindu (2018) had company); t for the t th time period; and eit is the common error
studied the determinants of capital structure of term.
passenger car companies and found that none of the

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Determinants of RoE using DuPont Analysis -
A Study of BSE 500 companies

Description of Dependent and Independent Table I shows the industry wise classification of
variables of the model are as follows companies selected for the present study. Companies
Dependent Variable Explanation with more than 10% representation in the sample are
RoE Return on Equity= Profit from Chemicals, Construction, Engineering, FMCG and
after tax/Shareholders
Healthcare sectors. Around 1% of the sample
funds for company I at
time t companies were diversified into various businesses.
Independent Other companies include representations from
Variables communications, textiles, automobiles and consumer
Profit Margin PAT/Sales = Profit after durables.
tax/Total sales for
company I at time t. Figure I
EM Equity Multiplier = Total
assets/Equity for
company I at time t. This
is a proxy variable to
measure the amount of
debt used to purchase
assets of a company
Sales/total assets for
Assets Turnover company I at time t.
The top 50 companies which are ranked according to
RoE and in descending order for all the three years
are shown in appendices. The companies which are
Table II shows the descriptive statistics of the variables
consistently been in top 50 for all the three years have
considered for the study. The average total assets/
been shown in a group separately. Those details are
networth has been hovering around 2.5 times during
also available in the appendix.
2015-2018. The average profit margins measured by
4. Analysis and Interpretation PAT/Sales has gradually increased from 8.2% to 9.6%.
Table I The average value of Sales/Total assets (a measure to
Industry Wise Classification of Companies gauge the efficiency of using the assets) has
decreased from 1.12 to .986 respectively. The average
Row Labels No. of Companies RoE (return on equity) has fallen from 16% to 13.6%
Automobile 24 during the period of study.
Chemicals 40 Table II Descriptive Statistics
Communication 6
Construction 45 Total Assets/Networth
Consumer Durable 13 Particulars 2015-16 2016-17 2017-18
Diversified 5 Mean 2.570 2.452 2.565
Energy 28 Median 2.033 1.961 1.859
Engineering 36 Standard
1.684 1.842 4.047
FMCG 43 Deviation
Healthcare 37 Minimum 0.024 1.069 1.081
Metals 22 Maximum 14.168 23.841 67.320
Services 42
Technology 21
Textiles 9
Grand Total 371

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 Applied Research Project, 2020

influence on return on equity. PAT/Sales, which

PAT/Sales
measures the margin on sales earned by companies
Particulars 2015-16 2016-17 2017-18
has the highest influence on determining return on
Mean 0.082 0.086 0.096
equity. Sales/TA which measures the efficiency of the
Median 0.077 0.079 0.087
total assets is the second most important factor
Standard
0.130 0.114 0.250 followed by TA/NW. Adj R square measures the
Deviation
Minimum -1.707 -0.958 -2.385 strength of the relationship and it shows that 58% of
the variation in the dependent variable is jointly
Maximum 0.486 0.494 2.889
explained by the independent variables. It can be seen
Sales/Total Assets that the margin on sales is the most significant variable
Particulars 2015-16 2016-17 2017-18 determining the return on equity.
Mean 1.112 1.041 0.988 Table IV Regression Results II
Median 0.933 0.917 0.868 Standard t P-
Variables Coefficients
Error Stat value
Standard Intercept 0.11885 0.04221 2.81568 0.00618
1.024 0.781 0.692
Deviation TA/NW 0.05246 0.01013 5.17897 0.00000*
Minimum 0.029 0.014 0.022 PAT/Sales 0.11035 0.06472 1.70496 0.09223
Sales/TA 0.06451 0.01264 5.10517 0.00000*
Maximum 14.612 10.036 7.977
Adj R square 0.373 F value 16.86, sig.@1% *sig.@1%
Return on Equity
Particulars 2015-16 2016-17 2017-18 Table IV shows the regression results of factors
Mean 0.160 0.137 0.136 determining RoE of all the twenty-seven companies
Median 0.148 0.150 0.149
which could not be in top 50 companies consistently
Standard
0.229 0.223 0.241 for all the three years of study. The top 50 companies
Deviation
Minimum -2.341 -2.058 -2.363 are ranked on the descending order based on the
Maximum 1.819 1.133 0.948 RoE. The results indicate that all the variables except
for PAT/Sales significantly influence RoE. The variables
Table III Regression Results I
also have a positive influence on return on equity.
Standard t P- PAT/Sales, which measures the margin on sales earned
Variables Coefficients
Error Stat value by companies does not determine RoE as the t stat
Intercept -0.53 0.13 -4.02 0.00* (p>0.05) indicates that the variable is not statistically
TA/NW 0.13 0.01 9.86 0.00* significant. Sales/TA which measures the efficiency of
PAT/Sales 2.42 0.38 6.42 0.00* the total assets is the most important factor followed
Sales/TA 0.20 0.04 4.98 0.00* by TA/NW. Around 6% variation in the dependent
variable is explained by Sales/TA and 5.2% variation
Adj R square 0.58, F value 32.54 (Sig. @1%), *Sign is explained by TA/NW.Adj R square of 0.373 shows
@1% that 37.3% variation in return one equity is jointly
influenced by sales/TA and TA/NW.
Table III shows the regression results of factors
determining RoE of all the twenty-three companies 5. Findings and Discussion
which have been in top 50 in all the three years
The study employed the widely used model ‘Dupont’
considered for the study. The top 50 companies are
analysis to measure return on equity of companies
ranked on the descending order based on the RoE.
selected during the period of study. Based on the
The results indicate that all the variables significantly
analysis, the study found that there were twenty-three
influence RoE. The variables also have a positive
companies which were consistently part of top 50
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Determinants of RoE using DuPont Analysis -
A Study of BSE 500 companies

companies ranked according to RoE and in descending Kabajeh, M.A.M., Al Nu’aimat, S.M.A., Dahmash, F.N.
order. These companies were formed into a group (2012). The Relationship between the ROA, ROE
and ROI Ratios with Jordanian Insurance Public
and the rest of the companies were formed another Companies Market Share Prices. International
group. Pooled regression analysis was carried out to Journal of Humanities and Social Science, 2(11),
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equity. The results indicate that all the three variables KHARE, Sumi; RIZVI, Saima. Factors Affecting the
viz., profit margin, equity multiplier and asset turnover Capital Structure of BSE-100 Indian Firms: A
Panel Data Analysis. Indian Journal of Finance,
ratios were significantly influencing return on equity
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for the twenty-three companies. Profit margin was the Available at: <http://www.indianjournal
most significant factor influencing return on equity. offinance.co.in/index.php/IJF/article/view/
Similar analysis was done for the other group. The 72503>. Date accessed: 19 Aug. 2018.
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turnover ratio were the most significant factors between Equity Return and Equity Fund Flow:
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Journal of Financial Studies, 39(2), 139-170. DOI:
margin was found to be statistically insignificant. 10.1111/j.2041-6156.2010.00007.x.
Therefore, the study concludes that it is the profit
Leisz TJ and Maranville SJ (2008), ‘Ratio Analysis
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for all the three years vis a vis the other companies in topic in the Finance Module of Small Business
determining return on equity. Management and Entrepreneurship Courses’,
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on the Return on Equity for the Romanian Jordanian Insurance Public Companies Market
Industrial Companies. Annals of University of Share Price’, International Journal of Humanities
Craiova – Economic Sciences Series, 2(38). 94- & Social Science, Vol. 2 No. 11, pp. 115 – 120.
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Fabozzi, F., Peterson, P., (2003), Financial management Journal of Finance, [S.l.], p. 38-50, nov. 2013.
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Porter, R.B. (2005). Connecting Optimal Capital Passenger Car Companies in India. Indian
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Determinants of RoE using DuPont Analysis -
A Study of BSE 500 companies

2015-16
COMPANY ROE Total Assets/ PAT/ Sales/
Networth Sales Total Assets
1 Dish TV India Ltd 1.81876 10.347 22.16% 0.793
2 Johnson Controls -Hitachi Air Conditioning India Ltd 137.30% 3.088 3.04% 14.612
3 Tata Metaliks Ltd. 113.05% 8.675 8.05% 1.620
4 InterGlobe Aviation Ltd 108.47% 7.098 11.99% 1.275
5 Castrol India Ltd 106.89% 2.887 18.36% 2.016
6 Hindustan Unilever Ltd 62.96% 2.244 11.85% 2.368
7 Colgate-Palmolive India Ltd 56.55% 1.907 13.72% 2.162
8 Blue Dart Express Ltd 51.54% 3.322 7.58% 2.047
9 Torrent Pharmaceuticals Ltd 49.60% 2.592 25.07% 0.763
10 Cadila Healthcare Ltd 48.02% 2.579 20.18% 0.922
11 Crompton Greaves Consumer Electricals Ltd 45.99% 7.227 5.79% 1.098
12 Alembic Pharmaceuticals Ltd 45.65% 1.425 23.17% 1.382
13 TVS Srichakra Ltd 45.12% 2.351 7.79% 2.462
14 Wockhardt Ltd 44.00% 14.168 5.58% 0.557
15 Page Industries Ltd 43.69% 1.785 12.82% 1.909
16 Havells India Ltd 42.74% 1.442 16.05% 1.846
17 VST Industries Ltd. 41.33% 2.233 16.95% 1.092
18 Bajaj Corp Ltd 40.83% 1.177 23.71% 1.463
19 Gulf Oil Lubricants India Ltd 40.36% 2.610 9.75% 1.587
20 Tata Elxsi Ltd 40.14% 1.555 14.24% 1.813
21 Britannia Industries Ltd. 39.38% 1.668 9.42% 2.505
22 Larsen & Toubro Infotech Ltd 39.36% 1.488 13.86% 1.909
23 Indo Count Industries Ltd 39.35% 2.179 11.91% 1.517
24 L&T Technology Services Ltd 39.28% 1.823 13.29% 1.622
25 Inox Wind Ltd 38.86% 4.026 10.25% 0.942
26 Triveni Turbine Limited 37.74% 1.930 14.85% 1.317
27 Avanti Feeds Ltd 37.25% 1.473 7.74% 3.268
28 Symphony Ltd 37.15% 1.326 25.38% 1.104
29 Eris Lifesciences Ltd 37.14% 1.313 18.53% 1.526
30 Welspun India Ltd. 36.92% 3.256 12.35% 0.918
31 Kansai Nerolac Paints Ltd. 35.86% 1.288 20.97% 1.327
32 Caplin Point Laboratories Ltd 35.72% 2.085 18.88% 0.907
33 Marico Ltd 35.60% 1.664 11.82% 1.809
34 Hero MotoCorp Ltd 35.23% 1.460 10.00% 2.414
35 Ajanta Pharma Ltd 34.89% 1.249 23.47% 1.190
36 MRF Ltd 34.74% 1.835 11.00% 1.721
37 Tata Consultancy Services Ltd 34.45% 1.247 22.02% 1.254
38 DCM Shriram Ltd 34.41% 2.395 5.16% 2.784
39 Eveready Industries India Ltd 33.46% 3.245 4.92% 2.094
40 Eicher Motors Ltd 32.58% 1.352 16.65% 1.448
41 ITI Ltd 31.99% 7.431 15.00% 0.287
42 Century Plyboards India Ltd 31.56% 2.185 9.53% 1.516
43 eClerx Services Ltd 31.28% 1.180 25.29% 1.048
44 Chennai Petroleum Corp Ltd 31.27% 4.195 2.22% 3.353
45 Sheela Foam Ltd 30.94% 2.329 6.68% 1.987
46 Pidilite Industries Ltd 30.11% 1.387 13.97% 1.554
47 Motherson Sumi Systems Ltd 30.01% 3.368 4.68% 1.904
48 Bajaj Auto Ltd 28.97% 1.230 16.33% 1.442
49 Hindustan Petroleum Corp Ltd 28.05% 4.174 2.35% 2.862
50 Aurobindo Pharma Ltd 27.78% 2.184 14.30% 0.889

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 Applied Research Project, 2020

2016-17
Total Assets/ PAT/ Sales/
COMPANY ROE
Networth Sales Total Assets
1 Castrol India Ltd 113.3% 3.168 19.82% 1.804
2 Hindustan Unilever Ltd 66.4% 2.321 12.43% 2.300
3 Tata Metaliks Ltd. 55.1% 5.144 8.09% 1.325
4 Crompton Greaves Consumer Electricals Ltd 54.7% 4.082 7.22% 1.855
5 DCM Shriram Ltd 48.1% 2.205 9.45% 2.308
6 Colgate-Palmolive India Ltd 45.3% 1.814 14.35% 1.741
7 Bajaj Corp Ltd 44.2% 1.193 26.10% 1.418
8 InterGlobe Aviation Ltd 43.9% 4.025 8.57% 1.273
9 Caplin Point Laboratories Ltd 42.8% 1.598 23.34% 1.148
10 Siemens India Ltd (oct- sept) 42.5% 1.762 25.28% 0.953
11 Eris Lifesciences Ltd 41.7% 1.230 31.84% 1.066
12 Balrampur Chini Mills Ltd 41.3% 2.581 16.17% 0.991
13 Page Industries Ltd 40.0% 1.733 12.36% 1.867
14 Hindustan Petroleum Corp Ltd 39.1% 3.812 3.82% 2.685
15 Hatsun Agro Products Ltd 38.6% 4.675 3.19% 2.592
16 Oracle Financial Services Software Ltd 36.3% 1.844 25.87% 0.761
17 Symphony Ltd 36.2% 1.301 20.81% 1.335
18 Marico Ltd 34.7% 1.553 12.64% 1.767
19 L&T Technology Services Ltd 34.3% 1.503 15.40% 1.481
20 Hero MotoCorp Ltd 34.2% 1.475 11.26% 2.058
21 Mangalore Refinery & Petrochemicals Ltd 33.3% 3.325 5.45% 1.839
22 Gulf Oil Lubricants India Ltd 33.2% 2.085 9.18% 1.734
23 Zee Entertainment Enterprises Ltd 33.2% 1.533 33.34% 0.649
24 Britannia Industries Ltd. 32.8% 1.522 9.34% 2.306
25 Ajanta Pharma Ltd 32.3% 1.163 25.02% 1.111
26 Eveready Industries India Ltd 32.3% 2.782 6.54% 1.776
27 Jindal Stainless (Hisar) Ltd 31.8% 7.310 3.38% 1.286
28 Jamna Auto Industries Ltd 31.5% 1.686 7.42% 2.522
29 Tata Elxsi Ltd 30.9% 1.283 13.99% 1.722
30 Larsen & Toubro Infotech Ltd 30.9% 1.410 14.52% 1.508
31 Supreme Petrochem Ltd. 30.7% 1.941 5.55% 2.854
32 8K Miles Software Services Ltd 30.7% 1.459 19.48% 1.081
33 Chennai Petroleum Corp Ltd 30.5% 1.590 15.55% 1.238
34 Nestle India Ltd 30.5% 3.378 2.59% 3.497
35 Tata Consultancy Services Ltd 30.4% 2.075 10.40% 1.413
36 Triveni Turbine Limited 30.2% 1.193 21.57% 1.183
37 Natco Pharma Ltd 29.3% 1.402 23.32% 0.897
38 eClerx Services Ltd 29.1% 1.150 26.07% 0.971
39 Bharat Petroleum Corp Ltd 29.0% 3.328 3.87% 2.251
40 Avanti Feeds Ltd 29.0% 1.429 7.78% 2.607
41 Monsanto India Ltd 28.4% 1.309 22.99% 0.943
42 PI Industries Ltd 28.2% 1.414 18.99% 1.052
43 GHCL Ltd 28.2% 2.602 12.62% 0.860
44 VST Industries Ltd. 27.9% 1.480 6.59% 2.860
45 Eicher Motors Ltd 27.6% 1.311 20.35% 1.036
46 Coal India Ltd 27.5% 4.738 8.45% 0.688
47 Sundaram Fastners 27.5% 2.036 9.62% 1.402
48 Indo Count Industries Ltd 27.2% 1.784 10.28% 1.482
49 Hindustan Zinc Ltd 27.0% 1.681 39.09% 0.411
50 Sheela Foam Ltd 27.0% 1.981 6.52% 2.088

8
Determinants of RoE using DuPont Analysis -
A Study of BSE 500 companies

2017-18
Total Assets/ PAT/ Sales/
COMPANY ROE
Networth Sales Total Assets
1 Unichem Laboratories Ltd 94.8% 1.190 288.87% 0.276
2 Hindustan Unilever Ltd 71.6% 2.447 14.27% 2.050
3 Thomas Cook (India) Ltd 70.6% 1.405 53.72% 0.935
4 Castrol India Ltd 67.8% 1.938 17.58% 1.991
5 HEG Ltd 57.6% 1.434 39.68% 1.013
6 Avanti Feeds Ltd 45.2% 1.143 13.26% 2.984
7 Tata Metaliks Ltd. 44.4% 3.137 8.31% 1.702
8 Colgate-Palmolive India Ltd 44.2% 1.682 15.93% 1.649
9 Bajaj Corp Ltd 42.9% 1.234 24.75% 1.404
10 Crompton Greaves Consumer Electricals Ltd 41.0% 3.072 7.88% 1.695
11 Page Industries Ltd 41.0% 1.667 13.48% 1.822
12 DCM Shriram Ltd 40.9% 1.859 9.61% 2.289
13 Tata Motors Ltd 40.3% 3.453 13.05% 0.894
14 Caplin Point Laboratories Ltd 39.7% 1.375 26.18% 1.104
15 Jindal Stainless (Hisar) Ltd 39.0% 4.492 5.50% 1.579
16 Graphite India Ltd. 37.8% 1.384 30.53% 0.894
17 Nestle India Ltd 35.8% 2.152 11.82% 1.408
18 Coal India Ltd 34.4% 6.309 8.36% 0.652
19 Gulf Oil Lubricants India Ltd 33.9% 2.201 11.29% 1.365
20 Eris Lifesciences Ltd 33.3% 1.648 33.44% 0.604
21 Tata Elxsi Ltd 32.6% 1.285 16.83% 1.507
22 Marico Ltd 32.4% 1.597 13.71% 1.478
23 8K Miles Software Services Ltd 32.2% 1.283 23.95% 1.047
24 InterGlobe Aviation Ltd 31.7% 2.985 9.36% 1.134
25 VST Industries Ltd. 31.4% 1.828 13.20% 1.299
26 Symphony Ltd 31.0% 1.237 22.26% 1.127
27 Akzo Nobel India Ltd 31.0% 1.729 14.10% 1.271
28 Hero MotoCorp Ltd 30.9% 1.442 11.07% 1.933
29 Tata Consultancy Services Ltd 30.3% 1.243 20.42% 1.192
30 Jamna Auto Industries Ltd 29.6% 1.862 7.10% 2.236
31 Britannia Industries Ltd. 29.4% 1.517 9.88% 1.958
32 Larsen & Toubro Infotech Ltd 28.8% 1.394 14.39% 1.437
33 Hindustan Petroleum Corp Ltd 28.3% 3.512 2.94% 2.741
34 Indiabulls Real Estate Ltd 27.9% 2.371 32.17% 0.366
35 Tata Chemicals Ltd 27.6% 1.873 36.28% 0.406
36 Dilip Buildcon Ltd 27.6% 4.891 7.95% 0.709
37 L&T Technology Services Ltd 27.3% 1.397 13.42% 1.457
38 Blue Dart Express Ltd 27.2% 2.825 5.13% 1.877
39 TTK Prestige Ltd 26.9% 1.539 14.59% 1.200
40 Sundaram Fastners 26.9% 1.942 10.59% 1.309
41 Oracle Financial Services Software Ltd 26.3% 1.260 26.79% 0.778
42 Godrej Consumer Products Ltd 26.1% 2.231 16.27% 0.719
43 Sterlite Technologies Ltd. 25.9% 2.952 10.07% 0.871
44 Hindustan Zinc Ltd 25.8% 1.195 38.22% 0.565
45 Pidilite Industries Ltd 25.8% 1.388 15.17% 1.223
46 Monsanto India Ltd 25.7% 1.312 23.87% 0.821
47 VIP Industries Ltd 25.6% 1.580 8.77% 1.845
48 Bharat Petroleum Corp Ltd 25.4% 3.126 3.48% 2.334
49 Abbott India Ltd 25.2% 1.427 11.69% 1.511
50 Vakrangee Ltd 25.0% 1.154 9.93% 2.184

9
 Applied Research Project, 2020

Data of Companies which are consistent in Top 50

RoE TA/NW PAT/Sales Sales/TA
1.130533 8.675 0.080451173 1.620
1.084743 7.098 0.11985325 1.275
1.068883 2.887 0.183626265 2.016
0.629607 2.244 0.118467993 2.368
0.5655 1.907 0.137202545 2.162
0.459907 7.227 0.057939004 1.098
0.436935 1.785 0.128190164 1.909
0.413332 2.233 0.169494374 1.092
0.408342 1.177 0.2371208 1.463
0.40362 2.610 0.097460482 1.587
0.401382 1.555 0.142411053 1.813
0.393756 1.668 0.09423233 2.505
0.393647 1.488 0.13858286 1.909
0.39283 1.823 0.132859365 1.622
0.37252 1.473 0.077401625 3.268
0.371489 1.326 0.253766728 1.104
0.371386 1.313 0.185334362 1.526
0.357188 2.085 0.188831399 0.907
0.356026 1.664 0.118234065 1.809
0.352303 1.460 0.099983102 2.414
0.344506 1.247 0.220236284 1.254
0.344076 2.395 0.051610077 2.784
0.28053 4.174 0.023485365 2.862
0.551338 5.144 0.080922268 1.325
0.439023 4.025 0.0856574 1.273
1.132875 3.168 0.198249299 1.804
0.663612 2.321 0.124280337 2.300
0.453313 1.814 0.143534331 1.741
0.546924 4.082 0.072230243 1.855
0.399954 1.733 0.123576202 1.867
0.278754 1.480 0.065855166 2.860
0.44162 1.193 0.260964025 1.418
0.331956 2.085 0.091831879 1.734
0.309128 1.283 0.139939282 1.722
0.327752 1.522 0.093365982 2.306
0.308702 1.410 0.145179138 1.508
0.342917 1.503 0.154029941 1.481
0.289987 1.429 0.077817535 2.607
0.361531 1.301 0.208073958 1.335
0.417321 1.230 0.3183632 1.066
0.428413 1.598 0.233421381 1.148
0.346714 1.553 0.126364192 1.767
0.341552 1.475 0.112560906 2.058
0.304424 1.193 0.215710346 1.183
0.481264 2.205 0.094542974 2.308
0.390852 3.812 0.038186068 2.685
0.443793 3.137 0.083147387 1.702
0.316831 2.985 0.09355591 1.134
0.678169 1.938 0.175800021 1.991
0.715929 2.447 0.142728415 2.050
0.441667 1.682 0.159309643 1.649
0.41012 3.072 0.078773164 1.695
0.409508 1.667 0.134826606 1.822

10