Worst performing Tata group company announces its best ever dividend for FY24

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Tata Elxsi may have corrected more than 30% from their record highs, but the dividend declared for FY24 has surpassed its previous records. For the latest financial year, the company has declared its highest-ever dividend per share (DPS) of ₹70, translating to a dividend outgo of ₹436 crore. That’s more than half of its full-year net profit, which stood at ₹792 crore.

Interestingly, the DPS of Tata Elxsi has seen a ten-fold jump over the last eight years, whereas its revenue and profit have recorded three- and five-fold jumps during the same period. Between FY20-FY24, the dividend payout has increased at an annualised rate of 39% to ₹436 crore. In comparison, the revenue increased at a compounded rate of 17% to ₹3,552 crore and profit at 22% to ₹792 crore.

However, Tata Elxsi—the 11th most valuable firm from the Tata Group has a lower equity base compared to other group companies like Tata Consultancy Services (TCS), Tata Motors, Tata Steel etc. While Tata Steel has a higher number of outstanding shares among the group companies, the equity base of Tata Elxsi stood at just 6.2 crore as of March 2024. That compares with 1,248 crore outstanding shares for Tata Steel and 362 crore for TCS.

With a drop of 15.5% so far in 2024, Tata Elxsi stock emerges as the worst performer in the group. Additionally, of the 10 analysts who track the stock on Bloomberg, 60% have a “Sell” recommendation on the stock, while the remaining suggest a “Buy”.

Moreover, the stock has been ending in the red for the last ten sessions, barring one. Shares of Tata Elxsi have cumulatively lost 8% during the latest losing streak. Tata Elxsi manufactures computers and workstations, besides providing system design, software development and integration services.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow