Slowdown hurts: Dividend payout declines 21.6% in HI

Written by Pradip Kumar Dey | Mumbai | Updated: Nov 2 2011, 03:28am hrs
Fewer companies paid dividend, that too lesser compared to previous times, to shareholders in the period between April and September, signaling that profits this year will be under pressure.

Seventy seven companies, which declared interim/special dividends until September, paid R7,455 crore, 21.6% lower than R9,508 crore they paid in the same period previous year. In the first half of the previous fiscal, 103 companies had declared interim/special dividends.

The amount of interim and special dividends as well as the number of companies declaring such dividends has gone down as slowdown has impacted most of the companies and as a matter of prudent policy, the effect was visible on dividend, says Kishor P Ostwal, chairman and managing director at domestic research firm CNI Research.

Software companies led the interim dividend payout, followed by motorbike makers. Nine software companies including Infosys Technologies and Hexaware Technology paid anywhere between 25% and 1,500% as special dividend.

Infosys net profit increased by 11% to R1,822 crore during July-September 2011 from the level of R1,641 crore during July-September 2010. This rise was boosted by a weak rupee. But the company cut its full-year revenue outlook and warned about global economic uncertainty. Similarly, the net profit of Hexaware Technologies increased by 33.5% to R55.47 crore during July-September 2011 from the level of R41.53 crore during the same period in 2010.

One reason could be that companies are feeling less confident about their financial performance for the current year, says Dipen Shah, head of fundamental Research, at domestic brokerage Kotak Securities. Several companies may have their own capital requirement for expansion and hence they want to conserve cash, he added.

Motorbike maker Hero Motocorp declared the highest dividend of 3,500 % to their shareholders on April 20, 2011. It reported a 19.4% increase in net profit to R603.62 crore during July-September 2011 from the level of R505.60 crore during July-September 2010. Munjals, the largest shareholders in the company, received R730 crore with their 52.1% stake in the company.