PSUs give lower dividends even as many see profits, revenues rise

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Interestingly, of the 38 PSUs for which the dividend data is currently available, 21 firms reported an increase in revenue, both on a year-on-year and quarter-on-quarter basis.

Public sector undertakings or PSUs doled out lower dividends in FY24 when compared to the previous financial year even as a majority of such government-owned, listed entities saw an increase in their revenues and profits, along with higher operating margins.

Currently, dividend payout data is available for 38 PSUs and 31 of these firms paid a lower dividend in FY24 compared to what they did in FY23. In all, there are 104 PSUs that are listed on the stock exchanges.

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Data from Prime Database showed that the 38 PSUs paid a cumulative dividend of Rs 84,442.54 crore in FY24 even as the remaining state-owned companies are yet to report their dividends for the fiscal ended March 31.

In FY23, a total of 76 PSUs paid dividends totalling Rs 1.09 lakh crore.

Analysts said that  while dividend payout is directly linked to profitability, companies including PSUs could decide to reinvest profits into expansion, which, in turn, could lead to lower dividends. Also, if future profits are expected to be low, caution may lead to reduced dividends, they added.

Interestingly, of the 38 PSUs for which the dividend data is currently available, 21 reported an increase in revenue, both on a year-on-year and quarter-on-quarter basis.

Further, 11 companies posted higher operating profit margins compared to the previous year, while 18 reported an increase in net profit over the previous year.

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On the other hand, 17 PSUs saw a decrease in net sales compared to the previous year with eight companies also witnessing a drop in both operating profit margin and net profit when compared to both the previous year and the previous quarter.

Among the notable names, Coal India and NLC India saw a significant drop in revenue, with Coal India reporting a nearly 46 percent decrease and NLC India registering a 31 percent drop on an annual basis.

While Coal India reported a flat net profit, NLC India experienced a substantial 77 percent decrease in net profit. Additionally, MCTC, Indian Oil Corporation, SJVN, Engineers India and Bharat Petroleum Corporation, among others, saw net profit fall by between 40 percent and 70 percent on an annualised basis.

Several companies that gave a payout to shareholders in FY23, including HUDCO, Railtel Corp of India, Mishra Dhatu Nigam, NLC India, IRCTC and Mahanagar Gas, gave dividends in FY24 that were 50-60 percent lower.

Dividends from others like BEML, IRFC, Can Fin Homes, Ircon International and Oil India were lower by 40-49 percent. Incidentally, only NLC India, Mahanagar Gas and Ircon among these entities recorded lower revenues and profits, with the rest posting better earnings in FY24 versus FY23.

FY24 also saw consistent dividend payers like Coal India and ONGC also reporting a decrease, with dividends dipping by 15 percent and 13 percent, respectively.

Meanwhile, the lower dividend payout by a majority led to a corresponding fall in the dividend yield of these companies, primarily due to a huge rally in their respective stock prices.

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