India Inc’s dividend outgo hit a record Rs 3.3 trillion in FY22, translating into a payout ratio of 37.6%. The sharp rise in payouts was largely because state-owned banks resumed distributing dividends after a gap of six years and other CPSEs and top IT players too became more generous with payouts on improved profitability.
Top 400 companies from the NSE500 have given out Rs 2.6 trillion in FY21, data collated from Capitaline shows. The sample includes 400 companies from the NSE500 index, with a minimum dividend history of five years.
ONGC, which reported highest ever net profit of Rs 40,306 crore for FY22, declared highest ever dividend of Rs 13,209 crore for the year.
Similarly, the country’s largest lender, State Bank of India, paid out a record dividend of Rs 6,336.47 crore in FY22 against zero dividends between FY18 and FY20.
Along with SBI, other PSBs like Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Indian Bank, Punjab National Bank and Union Bank of India, also announced dividends in FY22, totaling Rs 12,961 crore.
The government is one of the major beneficiaries of the higher dividend payout by state-run entities along with other shareholders, including retail investors. Its receipts from CPSEs stood at Rs 59,000 crore in FY22, up 48% on-year. The Centre’s total dividend receipts from CPSEs, RBI and banks/financial institutions were Rs 1.6 trillion in FY22, up 65% on-year.
While Punjab National Bank, Bank of India and Bank of Maharashtra announced zero dividends since FY16, SBI did so between FY18 and FY20. “After eight years, we are declaring dividend of 32% to investors. I think it is a good sign,” said Atul Kumar Goel, MD & CEO of PNB, after the announcement of Q4 results.
State-owned banks had stopped paying dividends due to their weak financial condition following the RBI’s asset quality review exercise in FY16.
According to BofA Securities, FY22 was a big year for PSBs with recovery in loan growth, steady deposit growth and improvement in asset quality. “After a long asset quality cycle, their balance sheets are now healthy enough to start growing again. Overall, this will likely drive system loan growth to improve sustainably to trend 12-13% levels (from 10% now),” said the foreign brokerage in a note last month.
(With inputs from Prasanta Sahu in New Delhi)