Latest news with #AnandK.Rathi
Mint
25-06-2025
- Business
- Mint
Promoters pocket half of India Inc's massive dividend payouts despite sluggish earnings
Despite dismal earnings growth in FY25, Indian companies handed out a record ₹4.9 trillion in dividends—the highest in at least a decade—with promoters pocketing more than half the bounty. According to a Mint analysis of 496 companies from the BSE 500, based on Capitaline data (which includes both audited and unaudited figures, along with proposed dividends), promoters across public, private, and multinational corporations collectively received ₹2.5 trillion, or 51.5% of the total dividends declared. Of this, private-sector promoters took home ₹1.34 trillion (with a 53% share), a sharp 36% rise from the previous year. Foreign parents of MNCs mopped 20% more. The government, as a promoter of public sector undertakings (PSUs), meanwhile, saw its dividend haul from PSUs dip 4%. The trend of promoters claiming a lion's share is not surprising, though. In FY24, they took home ₹2.1 trillion (48.7% of total dividends), while in FY23, their share was even higher at ₹2.2 trillion (53.6%). The latest figures, however, underscore a growing concentration of dividend income in the hands of promoters, raising questions about capital allocation priorities. Dividends outpaced net profit growth of 9.5% in FY25. Also read: Dividends grew faster than profits in FY25. Is that a good or bad thing? A deeper dive into 370 consistent dividend-paying companies from the BSE 500 in FY24 and FY25 reveals that promoters are reaping more by distributing more. Promoters holding more than 70% stake in companies saw their dividend receipts surge by 45% compared to the previous year. In contrast, those with holdings between 50% and 70% registered a modest 8.5% increase, while firms with promoter stakes below 50% saw an 8.9% rise. A rise in promoter stakes in some cases also helped. Sourav Choudhary, managing director of Raghunath Capital, which manages the value-focused Vision Fund, noted, 'The sharp rise in dividend payouts to high-stake promoters, particularly those holding over 70%, indicates their growing influence in capital allocation decisions. While robust payouts reflect financial stability, such skewed distributions raise governance concerns and questions about board independence." 'If capital is being diverted toward promoter cash flows rather than productive reinvestment, it could undermine long-term shareholder value. This trend warrants closer scrutiny from institutional investors and regulators," he added. Also read Companies ring the IPO doorbell, but the reception is cold Growth caution While record dividend payouts might initially appear as a sign of corporate health, analysts caution that they could instead reflect a lack of viable reinvestment opportunities. Anand K. Rathi, co-founder of MIRA Money, argued that the surge in dividends is less about benefiting promoters and more about companies sitting on surplus cash with limited growth avenues. 'From a tax perspective, dividends are no longer the most efficient way for promoters to extract value," Rathi said. 'The real driver is the absence of better reinvestment opportunities. Companies in sectors like technology, telecom, commodities, and PSUs—which dominate the dividend payout list—are flush with cash but face constrained growth prospects." 'This is essentially a signal of a slow-growth environment, which is also reflected in muted earnings. If more lucrative investment opportunities emerge, dividend payouts will likely taper off," he added. However, not all experts view high dividends as a concern. Kranthi Bathini, equity strategist at WealthMills Securities, said, 'Dividends are always rewarding for investors, regardless of the motives behind them. The payout levels and dividend yields can vary significantly from company to company, depending on their future growth plans, capex needs, and expansion strategies. If a company sees strong growth opportunities, it may allocate more capital toward investments and reduce dividends." Promoters across several high-profile firms amassed huge wealth from their liberal payouts in FY25. Tata Consultancy Services (TCS) topped the chart with a 72.6% year-on-year jump in promoter dividends to ₹32,735.7 crore. This was followed by Vedanta with a 40.2% rise in payouts to ₹9,123.4 crore.
Mint
06-05-2025
- Business
- Mint
Shareholding moves in Q4: Did retail investors' small-cap love fizzle out?
After two blistering years of runaway gains, small-cap stocks finally met their reckoning in Q4FY25. As markets wobbled under global pressures and stretched valuations, retail investors and foreign funds beat a tactical retreat while domestic mutual funds doubled down, scooping up discounted shares, Mint's shareholding analysis showed. Retail investors—those holding shares worth up to ₹ 2 lakh—reduced their stakes in 51.5% of the 932 small-cap companies listed on the BSE SmallCap index. Foreign portfolio investors (FPIs), often seen as sentiment drivers, also pulled back, trimming exposure in 53.5% of these stocks. But while individuals and foreign investors hesitated, domestic mutual funds stood firm, increasing their holdings in 41% of small-caps. This divergence raises a key question: Were retail investors spooked by the quarter's turbulence, or did they simply chase safer havens? "Many retail investors treated small-caps as 'get-rich-quick' tickets, piling in without fully understanding the risks," explains Anand K. Rathi, co-founder of MIRA Money. "But by late 2024, reality hit—earnings couldn't justify sky-high valuations. Stocks plunged 30-50%, and inexperienced investors, often lacking deep research, sold in panic." Also read Q4 shareholding moves: Institutional appetite for post-correction mid-caps grows 'While retail investors fled, mutual funds stayed put. "Fund managers invest after rigorous analysis," says Rathi. "They understand volatility comes with the small-cap territory and trust the long-term fundamentals." Despite the Q4 jitters, zooming out reveals a more tempered picture. Over the past 12 months, retail investors have actually grown their share in small-caps by 140 basis points, from 15% to 16.4%. But the momentum has clearly slowed, with a 10-basis-point fall sequentially. Mutual funds have increased their exposure by 40 basis points (bps) in small-caps over the year, while FPIs stakes inched up just 10 bps and showed zero movement in Q4. The slowdown, especially on the retail front, underscores caution rather than capitulation. The recent market correction brought some much-needed sanity to overheated valuations. The BSE SmallCap index, after tumbling 16% in the March quarter, now trades at a price-to-earnings (P/E) ratio of 28.6x—well below its five-year average of 44x. While that may comfort value seekers, analysts caution against getting too excited. Also read Shareholding moves in Q4: Retail investors jump ship in choppy waters 'Corrections in 2025 have helped cool speculative froth in small-caps," said Gaurav Garg, research analyst at the Lemonn markets desk. 'But many stocks still appear overvalued when you consider the tepid earnings growth. This is the sixth part of a series of data stories on the latest shareholding pattern. Read previous parts of our shareholding series here .
