Ka-ching! $193Bn Dividend Bounty For India Inc. Shareholders

IT'S NOT RAINING, it's pouring — money. Over the past five years, a record-breaking surge has seen owners of listed businesses taking home an unprecedented bounty in dividend payouts. Over the course of the past five years, amid the ebb and flow of bustling businesses and market tumult — punctuated by the pandemic — a vivid portrait of prosperity has come to the fore. We're talking cold, hard cash flowing directly from company coffers to shareholders, with the lion's share of the unprecedented wealth going to their promoters.

According to data sourced and analysed by Fortune India Research, over the past five years (FY19 to FY23) a record ₹14.67 lakh crore was paid out in cumulative dividends by listed companies, that's $192.86 billion. In each of these years, the number of dividend-paying companies varied with 1,352 paying in FY19, 1,104 in FY20, 1,245 in FY21, and 1,412 in FY22. In the recently concluded fiscal, 1,388 companies paid out dividends. What's interesting, though, is that despite the varying number of companies, the cumulative payout has only trended higher. From ₹1.94 lakh crore in FY19, the cash bonanza surged in subsequent years, hitting a high of ₹4.43 lakh crore in FY23. The bumper bonanza comes amid cumulative five-year profit of these companies surging to ₹41.98 lakh crore. In percentage terms, the total payout works out to 35% of the overall profit pool.

Of the ₹14.67 lakh crore, dividend pool, ₹7.51 lakh crore went to promoters. Non-promoters — comprising foreign portfolio investors and domestic institutional investors — took home ₹2.32 lakh crore and ₹2.11 lakh crore, respectively. Among domestic investors, mutual funds were the biggest gainers, taking a majority (₹1.09 lakh crore), followed by insurers (₹90,392 crore) and financial institutions/banks at ₹12,014 crore. Over the same period, high net worth individuals, who hold over ₹2 lakh in nominal share capital, took home ₹23,115 crore, while retail investors, who hold less than ₹2 lakh in nominal share capital, raked in ₹1.01 lakh crore.

Of the cumulative dividend pool, private Indian companies accounted for the majority, followed by multinationals, government undertakings and companies with diversified ownerships, for instance Infosys, and some private sector banks. In each of the past five years, the number of private business owners varied between 938 and 1,200, but they cumulatively took home ₹6.75 lakh crore. MNCs raked in ₹1.94 lakh crore, followed by government enterprises at ₹4.30 lakh crore.

Of the list, there are 820 companies which consistently paid dividends in each of the five financial years, cumulatively paying out ₹12.66 lakh crore out of a cumulative profit pool of ₹33.66 lakh crore. Interestingly, even as the overall profit pool of these companies in FY23 slipped 3% to ₹8.23 lakh crore, the payout during the fiscal stood at ₹3.77 lakh crore. HNI investors in these 820 companies cornered ₹17,789 crore, and retail investors ₹84,860 crore.

That retail participation has been growing is evident from the fact that the number of retail investors in these 820 companies went up from 4.59 crore to 11.32 crore, while HNI investors surged from 24,901 in FY19 to 3.22 lakh the next year and 4.45 lakh in FY21. Their number fell sharply to 31,845 in FY22 and 39,164 in FY23. This shows that HNIs entered these companies when their cumulative market cap hit a low of ₹85.41 lakh crore and exited when the m-cap peaked by March 2023 at ₹185 lakh crore. In other words, they not only made the most of the gains in stock prices, but also enjoyed dividends as the icing on the cake. In contrast, retail shareholders in these companies peaked to 11.32 crore in FY23, even as the cumulative market cap of the 820 companies slipped to ₹1.77 lakh crore.

What's pertinent to note is that the payout bounty coincides with a weak private investment cycle and a massive balance sheet clean-up by India Inc. Not surprising that of the 820 companies, Indian businessmen, excluding MNCs and PSUs, saw their cumulative payout more than doubling (2.65x) from ₹71,056 crore in FY19 to ₹2.10 lakh crore in FY23. In fact, the top 20 businesses, including MNCs, PSUs and diversified, account for ₹7.88 lakh crore in payouts, making up for nearly 62% of the ₹12.66 lakh crore payout by 820 companies.

Of the promoters' cumulative pool of ₹7.51 lakh crore, Indian business owners with identifiable promoter groups took home ₹3.86 lakh crore, while owners of diversified businesses, including the likes of Infosys, HDFC group, ICICI group and similar companies, got a payout of ₹29,420 crore. The government was the next biggest beneficiary, taking back to its coffers ₹2.55 lakh crore, followed by MNCs that made their parents richer with dividends worth ₹80,360 crore.

It comes as no surprise that the Tatas rank among the top promoters to have made the most of the bonanza at ₹92,194 crore, thanks to the group's biggest cash cow, Tata Consultancy Services (TCS). In fact, the cumulative payout of Tata companies more than doubled from ₹15,289 crore in FY22 to ₹34,047 crore in FY23. As a result, the holding company of the group, the privately held Tata Sons saw dividend inflow of ₹33,252 crore in FY23 compared with ₹11,499 crore in FY22. Of this, TCS made up for ₹29,881 crore as the company in the past fiscal paid a dividend of ₹42,090 crore. Tata Sons owns 72.27% of the country's largest IT services exporter.

The second-biggest beneficiary was Anil Agarwal of Vedanta Group, who took a record ₹85,298 crore in dividends over the past five years. But unlike the Tatas who are spending money to expand both organically and through acquisitions, Agarwal has primarily used the proceeds to pare down the debt pile at the group's UK-based holding company. In a contrast of sorts, Mukesh Ambani, who ranks first in Fortune India’s richest Indians, got dividends worth ₹11,791 crore over the five years. Shiv Nadar, who ranks 6th on the rich list, took home a bigger bounty worth ₹18,755 crore over the same period. Of the top businesses, Gautam Adani stood fifth, taking home dividends worth ₹7,769 crore.

Though the India growth story looks promising as ever, business owners, for now, are happy ploughing money back home.