Sources in the know said this trend is likely to continue in FY21 as well as firms take into account their own priorities before deciding upon the capital allocation policies | Representative image
Dividend payout by information technology (IT) services firms in the ongoing financial year is likely to witness a dip as compared to previous years, as companies are aggressively looking at conserving cash to tide over Covid-induced slowdown.
Possible decline in free cash flow because of fall in net profit, additional expenses due to the Covid-19 pandemic, and cash conservation for prospective acquisitions are seen as key factors for this likely scenario.
“Dividend policy will have to undergo a change this financial year. This is mainly because companies are expected to keep cash for acquisitions to generate growth to beat the negative growth that the industry is likely to clock on organic basis,” said V Balakrishnan, chairman of Exfinity Venture Partners, who is
First Published: Jun 15 2020 | 7:52 PM IST