Tata Sons dividend income may have slipped in FY25 for first time in 9 yrs

Tata Sons reported standalone operating income of Rs 43,767 crore in FY24 up 25.3 per cent from Rs 34,917 crore a year ago

Tata Sons’ dividend from Tata group companies for last financial year is expected to show a decline of 3.5 per cent to ₹36,514 crore from ₹37,832 crore a year earlier. This should be the first year-on-year decline in Tata Sons’ dividend in the last nine years.

 

The holding company had last reported a decline in FY16, when its proceeds had gone down 42.5 per cent to ₹6,898 crore from ₹11,993 crore a year earlier.

 

“A lower dividend will have some impact on Tata Sons’ ability to invest in newer ventures (such as ecommerce, electronics manufacturing, and aviation), most of which remain loss-making. However, things could change if Tata Consultancy Services (TCS) steps up its dividend payout in FY26,” said an analyst.

 

Tata Sons’ reported standalone operating income in FY24 was ₹43,767 crore, up 25.3 per cent from ₹34,917 crore in FY23. Nearly 95 per cent of Tata Sons’ operating income in FY24 came from dividend and proceeds from a buyback of TCS shares.

 

The holding company reported standalone net profits of ₹34,654 crore in FY24, up 56.6 per cent from ₹22,132 crore a year before.

 

As in the past, the decline is largely due to a cut in dividend payout from TCS, the group’s prime cash generator. 

 

TCS is paying a total of ₹46,612 crore in FY25, down 3.9 per cent from ₹47,467 crore (including the share buyback) in FY24.

 

As a result, Tata Sons’ payment from TCS is likely to decline to ₹32,722 crore in FY25 from ₹34,053 crore a year earlier.

 

Tata Sons holds 71.74 per cent in TCS, the highest among all listed group companies.

 

There was no share buyback by TCS in FY25 as against a buyback worth nearly ₹21,000 crore in FY24. This is likely to affect Tata Sons’ revenue and profits in FY25 because nearly 76 per cent of TCS’ payment for the financial year was done in the first three quarters by way of interim dividend and a special dividend in January this year. 

 

By comparison, around a quarter of the TCS payout for FY25 and dividend payout by other group companies will reflect in Tata Sons’ profit & loss account for FY26.

 

TCS is the biggest source of revenue for Tata Sons and it accounted for nearly 89.6 per cent of all its (Tata Sons’) dividend income from group listed companies for FY25, down marginally from its 90 per cent share for FY24. 

 

Tata Steel is a distant second, accounting for 3.9 per cent of Tata Sons’ dividend in FY25, followed by Tata Motors at 2.4 per cent. Other group companies together will account for 4 per cent.  

 

Tata Motors is paying ₹2,208 crore for FY25, down 4 per cent from ₹2,300 crore for FY24.

 

In comparison, Tata Steel and Titan have maintained their dividend payout for FY25 at the same level as in FY24.

 

In all, seven of the 14 listed group companies, in which Tata Sons has a direct stake, have raised their dividend payout in FY25.

 

For example, the dividend payout by Trent is up 56.3 per cent to ₹178 crore from ₹114 crore for FY24.

 

Other group companies reporting a big jump in dividend payout in FY25 include Tata Communications (49.7 per cent), Indian Hotels (28.6 per cent), Voltas (27.3 per cent), Tata Power (12.5 per cent), and Tata Consumer (10.6 per cent).