Over 92 large companies can pay additional dividends worth Rs 340 bn: IiAS

As many as 92 large companies which sit on a mount of cash, can pay out additional dividends to the tune of Rs 340 billion for the past financial year when these firms had muted earnings growth, says a report.

These 92 companies, drawn from the BSE 500 index whose members are sitting on a whopping Rs 1.85 trillion in aggregate cash/cash equivalents, have already paid Rs 407 billion in dividends in 2016-17 but can pay Rs 340 billion more, says proxy advisory firm IiAS.

According to its analysis, based on corporate financials in 2016-17, these companies continue to maintain large cash balances and at least 92 of them can potentially return cash to its shareholders as dividends or buybacks.

The companies, which are taken from S&P BSE 500 index, includes TCS, Infosys, Wipro, M&M, Ashok Leyland, Bajaj Auto, Indraprastha Gas, GsK Consumer Healthcare, Jubilant FoodWorks, and Nestle India among others.

It can be noted that TCS had concluded a Rs 160 billion share buyback in the second quarter, while Wipro did a Rs 110 billion buyback and Infosys concluded a Rs 130 billion buyback in the third quarter.

"Despite a muted earnings growth in fiscal 2017, these companies can pay higher dividends from their existing cash piles," IiAS said.

"Our research has identified 92 of the S&P BSE 500 companies that hold about Rs 1.85 trillion in cash or cash equivalents, of which conservatively, almost Rs 340 billion can be paid out in incremental dividends," it said.

These 92 companies have already paid Rs 407 billion in dividends in 2016-17 but can pay Rs 340 billion more.

According to the report market regulator "Sebi's mandate to the top 500 companies for an articulated dividend policy has helped to some extent, but cash hoarding continues to plague listed companies in the country".

Of these 92 companies, MRF, 3M India, ISGEC Heavy Engineering, Honeywell Automation India and Bosch India can pay dividends of over Rs 100 per share, while another seven can pay between Rs 50 and Rs 100 per share as dividends.

Of the companies identified, 54 appeared in the IiAS list last year as well, while 36 paid out more over fiscal 2016, but can still pay out more.