Vedanta Ltd. and its subsidiary Hindustan Zinc Ltd. together pay nearly a third of the Indian company’s ₹According to an analysis of Bombay Stock Exchange-listed companies that paid dividends in the first quarter of fiscal 2025, the dividends were Rs 43,000 crore. 176 companies declared dividends, which was the lowest since the first quarter of fiscal 2020. The data includes only interim dividends in the first quarter and excludes final dividends paid by companies at the end of fiscal 2024.
“Vedanta’s promoters needed to pay off debt, so they announced the highest dividend,” said Kranthi Bathini, equity strategist at WealthMills Securities Pvt. Ltd. “Some group companies give dividends because their promoters need money. They don’t say they need money, they say we want to reward our shareholders.”
Vedanta paid nearly ₹The dividend for the first quarter was Rs 7,821 crore, with HZL paying nearly ₹8,028 crore. The metals and mining giant announced in May that it plans to raise ₹8,500 crore through equity or debt.
Anil Agarwal, founder of Vedanta, said ₹6,800 crore through dividend in 2023-24. The company’s total debt is close to ₹As of March 2024, its net debt is Rs 71,760 crore ₹56,334 crore as on March 31, 2024.
Vedanta’s promoters are not the only ones making money through dividends. Cash-rich Tata Group leads the pack, with more than ₹Dividend and share buyback proceeds reported at Rs 36,500 crore Business StandardsThe Shiv Nadar family, which controls HCL Technologies, has an income of approx. ₹8,600 crore in 2023-24.
First quarter dividend
Vedanta Ltd, Hindustan Zinc, Tata Consultancy Services and HCLTech were among the top five companies paying out dividends in the first quarter, accounting for 64% of the total dividend payout during the quarter.
Apart from group companies, public sector enterprises also paid huge dividends. Two of the top five companies on the dividend list are state-owned enterprises, such as REC Ltd and Power Finance Corporation Ltd.
“State-owned enterprises and certain conglomerates tend to declare the largest dividends. These companies have the highest dividend yields, which has led to the highest total dividend outflows in five years,” said Bartini.
The dividends hit a multi-year high as most companies reported mediocre earnings. Revenue growth at these companies slowed to single digits for the first time in six quarters. Mint An analysis of 1,475 BSE-listed companies showed revenues grew 9% year-on-year and net profit rose marginally by 5%. A relatively high base in the previous year, rising input costs, weak global demand and a lagging rural consumer market dragged down profits.
“If more private companies are paying dividends, it could be because they are not looking to expand further, at least for now,” said Ajit Mishra, senior vice-president, research at Religare Broking Ltd. “That’s why they are compensating investors.”
“If the company is not doing well, then the dividend gives investors a reason to continue holding the company’s stock,” Mishra said.
Companies that are hesitant
While some companies paid generous dividends in the first quarter, many companies did not pay dividends this time. 176 companies paid dividends in the first quarter of this fiscal year, compared to 302 in the first quarter of fiscal 2023, 523 in the first quarter of fiscal 2022, 532 in the first quarter of fiscal 2021, and 601 in the first quarter of fiscal 2020. This shows a downward trend in the number of companies paying dividends.
Indian companies have a hard time getting rid of excess cash, “which they hold onto for investment later in new businesses or capacity expansion,” said Sandeep Bagla, chief executive of Trust Mutual Fund. “I don’t like companies that have a lot of excess cash and don’t deliver much return to shareholders.”
During periods when fewer companies are declaring dividends, investors are advised to build a more balanced portfolio.
“I prefer to invest in growth companies because India is a growth market,” Bagla said. “From a portfolio diversification perspective, it might also be a good idea to own some dividend-paying companies.”
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