Healthy FY15 dividend payout may keep investors hooked to IT stocks

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Mumbai | Published: May 28, 2015 12:08:15 AM

Most Indian IT companies maintained their record of healthy dividend distribution in fiscal 2014-15 with the IT giant TCS...

Most Indian IT companies maintained their record of healthy dividend distribution in fiscal 2014-15 with the IT giant TCS distributing a record dividend for any listed Indian company.

The biggest IT services company gave out a dividend of  Rs 79 per share (DPS), including special cash dividend of Rs 40  resulting into a total dividend outgo of Rs 15474 crore for the fiscal, a more than two-fold jump for the year.

Although Infosys brought down its DPS from Rs 63 to  Rs 59.5, due to higher equity base post its bonus issue, the total dividend outgo of the company went up from Rs 3,618 crore to Rs 5,111 crore. Both, Wipro and Tech Mahindra also distributed higher dividends to their shareholders while HCL Tech which reports its annual numbers for the period ending June, distributed lower dividend for the fiscal 2013-14.

Indian IT companies, especially the top two players are popular amongst investors for their strong dividend payout policy which increases the total return on these stocks.

This parameter may continue to support  investor interest in IT stocks. In the recent past the outlook for their revenue growth has been impacted with heavyweight TCS failing to keep its dominance on the revenue growth compared to its peers. Earlier in April, both TCS and Infosys stocks took a heavy beating after their January-March quarter numbers failed to meet street expectations. For the quarter ending March 2014, the dollar revenue growth of TCS and Infosys  reported 0.8%  and 2.6% of sequential decline in their respective dollar revenue growth for the period. On Wednesday, Tech Mahindra, reported a 39% q-o-q decline in   its net profit to R472 crore on account of higher forex loss.


Besides , leading IT companies even some FMCG players, public sector units and Tata group of companies are seen as lenient dividend payers. For FY15,  HUL and ITC  declared a final dividend of Rs 15 and Rs 6.25 per share respectively. Amongst the Amongst the Tatas promoted pack, after TCS, Titan Compnay announced a higher DPS of Rs 23 compared to last year. Tata Motors which recently concluded its rights issue and raised close to Rs 9,040 crore, did not declared any dividend in FY15, for the first time in thirteen years.

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