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Business Standard
4 days ago
- Business
- Business Standard
Related-party transactions below pre-pandemic levels, shows data
An RPT is a deal between connected entities. This can involve buying or selling of goods or raw materials among group companies Mumbai Listen to This Article Listed companies may have cut back on their related-party transactions. The value of such transactions is lower than levels seen before the pandemic. Such transactions are reported on the balance sheet and the profit-and-loss statement. The value of related-party transactions (RPTs) as a proportion of balance sheet assets was 5.8 per cent in 2024-25 (FY25), compared to 6.5 per cent in FY19, according to a Business Standard analysis of 262 BSE 500 companies with comparable numbers from data provider Capitaline. The value of RPTs reported on the profit-and-loss statement was equivalent to 11.9 per cent of net sales in FY25
Mint
05-08-2025
- Business
- Mint
Back in black: Indian companies start FY26 on a profitable note
Indian companies, long mired in a sluggish demand environment, are finally seeing a faint glimmer of hope. While the overall earnings picture for the June quarter remains subdued, the start of the fiscal year offers a tentative sign of relief. The silver lining? A significant drop in the number of loss-making companies and a notable jump in firms that have managed to reverse their fortunes, moving from red to black. This shift, though modest, signals a crucial turning point, hinting that a broader recovery might be on the horizon. Earnings turnaround A Mint analysis of 1,047 companies reveals a promising shift in corporate performance. The standalone data, sourced from Capitaline and based on first-quarter results, shows that the share of loss-making firms has hit a five-quarter low, dropping sharply to 16.4% in Q1FY26 from 21% in the previous quarter. But the real story is in loss reversals. A total of 110 firms—or 11% of the sample—swung from losses to profits, a substantial jump from 75 firms in Q4FY25 and a near doubling since Q3FY25. This turnaround is perhaps best illustrated by the significant increase in the positive-to-negative turnaround ratio. This crucial metric, which compares the number of companies moving from losses to profits against those doing the opposite, soared to 1.64 times in Q1FY26 compared to just 0.80 times in the previous quarter. Notable turnarounds included the likes of Quess Corp, a leading workforce management firm, which posted a ₹52.71 crore profit after a ₹81.26-crore loss in Q4. Fintech giant One 97 Communications (Paytm) also swung into the black with a ₹63 crore profit, ending two consecutive quarters of losses on a standalone basis. This welcome trend of loss reversals also extended to Motilal Oswal Financial Services, Network 18 Media, and Piramal Enterprises, suggesting a broad run of good fortune for some companies. Crucially, the long-term sustainability of these turnarounds will hinge on whether they were driven by fundamental operational improvements or one-time factors. Cautious outlook Meanwhile, companies witnessing a negative turnaround in their profits during the quarter fell to 67, down from 94 in Q4FY25. This shift, however, tells a cautious story as several of these newly struggling firms were previously stable or consistently profitable. For instance, MRPL and Chennai Petroleum posted losses after several strong quarters, hit by weak refining margins. The timing of these turnarounds is particularly noteworthy. They have taken place against a challenging economic backdrop, characterized by tight global liquidity, ongoing geopolitical strains, and an uneven domestic consumption recovery. The crucial question is whether this marks the beginning of a more stable growth cycle, leading to upgrades this earnings season: A recent Mint survey (between 25 and 30 July) of 34 investment professionals provided a starkly split verdict. While 47% of respondents expected downgrades to slightly outpace upgrades, a matching 47% believed downgrades have bottomed out at current levels, with a projected earnings pick-up from the second half of 2025-26. As the second quarter begins and the festive season approaches, all eyes will be on whether this momentum sustains.
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
23-06-2025
- Business
- Mint
Corporate largesse hits record ₹5 trillion amid profit slowdown
In a bold display of corporate confidence, Indian companies have handsomely rewarded shareholders with a record ₹4.9 trillion in dividends in FY25, even as profit growth slowed. The generous payout underscores a strategic shift among firms to prioritize returns for investors over aggressive reinvestment, signalling both optimism and caution in a volatile economic climate. A Mint analysis of 496 BSE 500 companies, based on Capitaline data that uses both audited and unaudited numbers (including proposed dividends), shows that dividend payouts rose 11% year-on-year in FY25, outpacing net profit growth of 9.5%. This marks the first such divergence in three years. In contrast, profit jumped 29% in FY24 while dividends grew a modest 7.5%. In FY23 too, firms were less generous, when profit grew 11% but dividend payouts rose only 8.8%. The trend reversal in FY25 points to a strategic recalibration—corporates are choosing to reward shareholders more aggressively even as earnings momentum slows. Also read Companies ring the IPO doorbell, but the reception is cold "Rising dividends outpacing profits reveal corporate confidence in rewarding shareholders despite modest earnings growth," said Akshat Garg, assistant vice-president, Choice Wealth. 'While this signals stability to investors, it may also reflect caution—companies could be limiting reinvestment amid uncertain growth prospects." Meanwhile, beyond just dividends from profits, Hemant Nahata, executive vice president, strategy at Yes Securities, offers a comprehensive view on shareholder payback, factoring in operating cash flows. 'Shareholder returns should be viewed holistically, combining dividends and buybacks," he noted. 'When we evaluate shareholder payback, we focus on how companies deploy their operating cash flows—not just profits. In FY25, Indian corporates returned around 29% of their operating cash flows to shareholders through dividends and buybacks, a marginal rise from 28.8% in FY24 and slightly below 31–32% in FY23, reflecting a consistent payout trend," he highlighted further. While these generous giveaways reached record highs in the previous year, outpacing even the bottomline growth of the companies, it translated into a payout ratio of 35.2% (as a share of profit) in FY25. This ratio remains significantly below the decade's average of 42%, implying companies are distributing more but are also retaining a larger share of earnings compared to historical trends. 'This shows a shift in strategy. Companies are retaining slightly more profits, possibly due to fewer growth opportunities or macro uncertainty," said Pranay Aggarwal, chief executive officer of Stoxkart. Manufacturing firms, in particular, appear cautious. 'Many companies are taking a wait-and-watch approach on capital allocation amid geopolitical uncertainty. Past missteps like the 2022 downturn in chemical firms due to poorly timed capex highlight the risks of aggressive investment, especially in capital-intensive sectors," noted Sreeram Ramdas, vice president, Green Portfolio PMS. Further, since FY22, payout ratios have seen a decline, reflecting cautious optimism in capital allocation. 'The declining payout ratio shows that companies are adjusting dividend policies to align with more conservative cash flow assumptions," Aggarwal added. Also read Is India's premium at risk? As Israel-Iran conflict sparks FPI outflows, valuation debate rages Despite this, around 62% of companies in the sample have been unwaveringly sharing the bounties over the past five years. Among these, around 18% have been bestowing their shareholders with higher dividends each year since 2020-21. In FY25, around 55% of firms doled out higher dividends compared to the previous year while only 17% firms saw a decline. 'The recent rise in dividends is driven more by past profitability and reserves than by sustained earnings growth. If macro headwinds continue, payouts may moderate," said Asutosh Mishra, head, institutional equities, Ashika Stock Broking. Moreover, the top ten dividend payers accounted for roughly 40% of India Inc's total dividend payouts in FY25, distributing a staggering ₹1.9 trillion to investors. 'This reflects confidence from large-cap firms with stable cash flows," said Mishra. 'Some may be using dividends tactically in a high-liquidity environment. A company-specific lens is essential to avoid overinterpretation." Leading the pack was TCS with payouts of over ₹45,000 crore, exemplifying the IT sector's cash-rich dominance. Close behind were HDFC Bank and ITC with payouts nearing ₹17,000-18,000 crore, while Coal India, ONGC, and Vedanta each contributed between ₹15,000-16,000 crore, reflecting the breadth of dividend leadership across sectors. For investors looking at dividend plays, Garg from Choice Wealth stresses the importance of diversification and fundamental strength. 'While reliable dividend payers offer steady income, concentrated exposure increases risk. 'A balanced portfolio with fundamentally strong and consistent dividend-growers is key." This is the first part of a four-part series of data stories on the dividends declared by India Inc.
Mint
08-05-2025
- Business
- Mint
Q4 earnings watch: Demand slowdown puts FMCG's ‘fast-moving' promise to test
Tepid consumer demand continued to weigh on fast-moving consumer goods (FMCG) companies' revenue growth in the March quarter, extending a streak of sluggish topline expansion. Yet, behind this lacklustre revenue performance, cost control measures emerged as a crucial buffer, stabilizing profits and preventing deeper erosion. A Mint analysis of 19 FMCG firms shows that aggregate year-on-year revenue growth remained stagnant at 6.1% in Q4, marginally down from 6.6% in the preceding December quarter. In stark contrast, net profits surged dramatically from 12.1% year-on-year growth in Q3FY25 to an impressive 31% in Q4FY25, underscoring the widening divergence between these key performance metrics. This analysis was based on standalone data sourced from the Capitaline database for companies that have released their latest financial results so far. Revenue growth has remained muted for FMCG firms across all quarters of 2024-25, reflecting a persistent demand slowdown that continues to weigh on topline performance across the sector. Conversely, net profit has risen steadily over the same period, barring a dip in the September quarter of FY25. This divergence has pressured margins: net profit margins fell to 12.8% in Q4 from 13.7% in Q3, but improved compared to the year-ago period. Read this | Q4 earnings watch: Whispers of rural recovery as revenues buck broader trend Efforts to protect profitability are evident in a contraction in aggregate expenses in the second half of the fiscal year, reversing nearly 9% growth seen in the first half. However, some costs have started creeping up as input prices for essential commodities increased towards the end of 2024, despite overall inflation stabilizing. Raw material costs as a share of net sales rose to 28.5% in Q4, up from 27.3% in Q3 and 27.7% a year earlier. Most firms appear to have passed these higher costs onto consumers, with further price hikes expected to support revenue growth. A NielsenIQ report underscores this trend, showing 11% year-on-year value growth for the FMCG segment in the March quarter, driven by a 5.1% volume gain and a 5.6% price increase. Read this | FMCG's mixed bag: Rural strength masks slump in latest quarter Still, the company-wise analysis reveals a mixed performance. While seven of the 16 profitable firms saw net profits shrink in Q4, with five of them posting double-digit declines, robust growth in eight other firms helped offset these losses. Notably, companies such as VST Industries, GM Breweries, and Dabur India, which reported the steepest net profit declines, also saw revenue drop in the March quarter, suggesting a link between topline challenges and bottomline performance for certain players. Also read | The complicated relationship between consumer sentiment and stocks This is the tenth part of a series of data stories about the ongoing Q4 earnings season. Read previous parts of our earnings series here.
