75 firms can return Rs 1.1 lakh crore to shareholders
The cash available for distribution is roughly one year’s profit after tax for these companies, IiAS said.
Mumbai: At least 75 of the BSE 500 companies can return cash of up to Rs 1.1 lakh crore to shareholders, going by their FY18 financial statements.
“These companies have large cash holdings and can distribute about half of their on-balance sheet cash, including cash equivalents, to shareholders as dividends or buybacks,” says a study by proxy advisory firm Institutional Investor Advisory Services India (IiAS).
The cash available for distribution is roughly one year’s profit after tax for these companies, IiAS said. While companies need to maintain liquidity for organic and inorganic growth, IiAS study questions how much is enough?
“The excessive cash on balance sheets resulted in Sebi mandating the top 500 companies to formally articulate a dividend policy. While companies have complied with this diktat, several companies continue to shy away from providing clarity to shareholders on what the expected dividend payout ratio is likely to be,” IiAS said.
These 75 companies can return a median of 49 per cent of their total cash and cash equivalents to their shareholders. There are nine companies that can distribute over 75 per cent of their FY18 on-balance sheet cash. They are: Abbott India, Symphony, Dr. Lal Pathlabs, Bajaj Consumer Care, Godfrey Phillips India, Honeywell Automation India, Bata India, Pfizer and Hindustan Zinc.
Of the 75, just five companies aggregate over 50 per cent, or Rs 56,600 crore, of the total incremental distributable cash. They are: Hindustan Zinc, ITC, Wipro, TCS and Bajaj Auto.