Tata Sons likely to earn record Rs 27,797 crore from its listed firms

Nearly two-thirds of these proceeds will show up in Tata Sons’ financial results for FY22, thanks to the quarterly interim dividend by its cash cow TCS.

Photograph: Danish Siddiqui/Reuters

Tata Sons, India’s biggest promoter in the private sector, is expected to earn a record Rs 27,797 crore via equity dividend and proceeds through share buyback from its listed group companies for the financial year 2021-22.

This amount is up 17.6 per cent from Rs 23,663 crore that it pocketed in FY21.

 

Nearly two-thirds of these proceeds will show up in Tata Sons’ financial results for FY22, thanks to the quarterly interim dividend by its cash cow Tata Consultancy Services (TCS).

The software major also completed its Rs 18,000 crore worth of share buyback programme for FY22 before the end of the financial year.

The rest of the dividend income shall accrue to Tata Sons in FY23 as other group companies declared their FY22 dividend at the end of the financial year.

Listed companies usually declare their annual dividends at the end of every financial year and the proceeds show up in shareholder accounts in the following year.

Tata Consultancy Services (TCS), however, pays an interim dividend every quarter, besides a final dividend at the end of Q4.

These proceeds are expected to boost Tata Sons’ revenue and profits in both FY22 and FY23, and help it fund the group’s newer ventures in aviation, e-commerce, and consumer products, besides funding the continued losses at the group’s telecom venture — Tata Teleservices.

Dividend income and proceeds from share buyback account for over 95 per cent of Tata Sons’ total revenue in a typical year.

The rise in Tata Sons’ dividend income in FY22 is largely due to a jump in payout by TCS and Tata Steel.

These two companies together are expected to account for 95 per cent of all dividend and share buyback proceeds from the listed group companies in FY22.

Tata Steel more than doubled its dividend payout to around Rs 6,200 crore in FY22, from around Rs 3,000 crore a year ago.

Nearly a third of the amount shall accrue to Tata Sons, given its 32.5 per cent stake in the company at the end of March 2022.

TCS remains the single biggest source of revenue and profit for Tata Sons, accounting for nearly 87.5 per cent of all the proceeds from its listed companies.

The holding company is expected to earn nearly Rs 24,415 crore from TCS in FY22, up from around Rs 21,750 crore in FY21.

The software major has returned nearly Rs 33,822 crore to its shareholders in FY22 by way of dividend and share buyback in FY22, up 12 per cent from Rs 30,175 crore in FY21.

The Tata group listed companies together plan to return a record Rs 43,507 crore to their shareholders via equity dividend in FY22 — 22.2 per cent more than a combined payout of Rs 30,370 crore in FY21.

Other Tata companies showing a big jump in dividend payout in FY22 include Trent (up 183 per cent YoY), Tata Investment Corporation (up 129 per cent YoY), Titan Company (up 87.5 per cent YoY), and Tata Consumer (up 49.4 per cent YoY).

Tata Elxsi, on the other hand, cut its dividend payout by 11.5 per cent in FY22 to Rs 264.7 crore, from Rs 299 crore a year ago; Tata Motors skipped dividend payout for the sixth consecutive year.

Barring TCS and Tata Steel, total amount of dividend payout by other group companies is too small to move the needle.

The analysis is based on the annual dividend paid/declared by listed Tata group companies every financial year.

Tata Sons’ share of the payout is based on its stake in these companies at the end of March every year.

To this, Business Standard has added Tata Sons’ estimated proceeds from share buyback by TCS based on its stake in the company before the buyback.

TCS has, so far, done four share buybacks through the tender route in FY17, FY19, FY21, and FY22.

The company has cumulatively returned Rs 66,000 crore to its shareholders, including Tata Sons through these buybacks.

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