Fundamental Glossary / Profitability Metrics
Return on Net Worth (RONW)
Profit after tax divided by net worth. In Indian filings this is the regulatory cousin of ROE.
Formula
PAT / net worth. Net worth is share capital plus reserves and surplus, minus fictitious assets and, where required, revaluation reserves.
What it means
RONW appears in Indian prospectuses, credit write-ups, and older annual reports. Conceptually it is ROE: the return on the owners' recorded capital.
The exact net-worth definition can exclude revaluation reserves so that a paper write-up of land does not flatter the denominator. Check the note that defines it.
How to read it
Read RONW the way you read ROE. High and stable is good when leverage is moderate and the profit is from operations. A jump that comes only from a smaller net worth is shrinkage, not improvement.
What to watch
Do not mix a consolidated PAT with standalone net worth, or the reverse. The mismatch is a common source of a ratio that looks better than the business.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.