Tech Mahindra Boosts Shareholder Returns with 70% Dividend Payout
Tech Mahindra in its annual report highlighted that the company will pay a 70% Dividend Payout with a total amount of ₹40 per share for the FY23-24
by Damodharan N
Updated Jun 29, 2024
Table of Content
In a move that will delight its shareholders, Tech Mahindra Limited has announced a robust dividend payout for the financial year 2023-24. The company's Board of Directors has recommended a final dividend of ₹28 per share, which combined with the earlier interim dividend of ₹12 per share, takes the total dividend for the year to ₹40 per share.
This translates to a dividend payout ratio of 70% of the company's free cash flow and 170% of its profit after tax (PAT). Together with the earlier interim dividend of ₹12 per share, the total dividend for FY 2023-24 amounts to ₹40 per share (800%) Such a high dividend payout underscores Tech Mahindra's commitment to creating sustainable shareholder value, even in the face of tough demand conditions.
"Upholding our fiduciary duty to create shareholder value, and thanks to our robust cash generation during the year, the Board has recommended a final dividend of ₹28 per share," the company said in its Integrated Annual Report.
"A significant portion of the growth over the next three years will be organic, in addition to our continuing work with the portfolio companies, as our endeavour to build capabilities in-house remains rock solid," the company stated.
With a strong balance sheet, healthy cash flows, and a clear strategic roadmap, Tech Mahindra appears well-positioned to deliver enhanced returns to its shareholders in the years ahead.
Tech Mahindra Annual Report
Tech Mahindra, a leading global IT services provider, has released its Integrated Annual Report for the financial year 2023-24. The report showcases the company's strong financial performance, strategic initiatives, and commitment to sustainable business practices.
Key highlights include robust revenue growth, healthy profitability, and significant progress in environmental, social, and governance (ESG) areas. Get the brief of the report
Key Financial Highlights:
- Consolidated Revenue from Operations: ₹519,955 million
- Net Profit: ₹23,578 million
- Earnings per Share (Diluted): ₹26.58
- Return on Capital Employed: 12.5%
- Free Cash Flow to PAT Ratio: 237%
Business and Operations Highlights:
- Incorporated a wholly-owned subsidiary, Pokhran Wind Energy Private Limited, to develop wind farms in India.
- Launched new digital solutions and services in areas like 5G, cloud, cybersecurity, and Industry 4.0.
- Expanded strategic partnerships with major technology providers like Microsoft, Amazon Web Services, and Google Cloud.
- Strengthened capabilities in emerging technologies like artificial intelligence, machine learning, and Internet of Things.
- Headcount stood at 145,455 employees with women comprising 33.12% of the workforce.
Industry Outlook and Future Strategy:
- The global IT services market is expected to grow at a CAGR of 8-10% over the next 3-5 years, driven by increasing technology adoption across industries.
- Tech Mahindra's strategic focus is on "Scale at Speed" - a combination of organic growth initiatives and portfolio optimization to improve financial performance and enable long-term sustainable growth.
- Key priorities include expanding digital capabilities, enhancing operational efficiencies, strengthening client relationships, and nurturing talent.
- The company aims to distribute 85% or more of its free cash flow generated over five years to shareholders through dividends or buybacks.
Management and Risk Analysis:
- The new leadership team, led by the recently appointed MD & CEO Mohit Joshi, brings extensive industry experience to drive the company's transformation.
- Key risks identified include macroeconomic uncertainties, talent crunch, cybersecurity threats, and regulatory changes, which the company is actively monitoring and mitigating.
- Tech Mahindra has a robust enterprise risk management framework in place to identify, assess, and manage risks across the organization.
Overall, Tech Mahindra's FY24 Integrated Annual Report showcases the company's strategic focus on digital transformation, operational excellence, and sustainable value creation for its stakeholders.
Tech Mahindra
Tech Mahindra is a prominent player in the global IT services industry, offering a wide range of digital solutions and consulting services to clients across various sectors. As part of the Mahindra Group, a multinational conglomerate with a strong presence in industries like automotive, agriculture, and renewable energy, Tech Mahindra leverages its parent company's expertise and resources to deliver innovative technology solutions.
With over 145,000 employees spread across 90+ countries, Tech Mahindra serves more than 1,100 clients worldwide. The company's core offerings include digital transformation, cloud computing, cybersecurity, artificial intelligence, and industry-specific solutions for sectors like telecommunications, healthcare, and manufacturing.
Tech Mahindra Boosts Shareholder Returns with 70% Dividend Payout - FAQs
1. What was Tech Mahindra's revenue in FY24?
Tech Mahindra reported revenue from operations of ₹519,955 million in FY24.
2. What was Tech Mahindra's net profit in FY24?
Tech Mahindra's net profit (PAT) was ₹23,578 million in FY24.
3. What was Tech Mahindra's earnings per share (diluted) in FY24?
Tech Mahindra's earnings per share (diluted) was ₹26.58 in FY24.
4. What was Tech Mahindra's return on capital employed (ROCE) in FY24?
Tech Mahindra's ROCE was 12.5% in FY24.
5. What was Tech Mahindra's free cash flow to PAT ratio in FY24?
Tech Mahindra's free cash flow to PAT ratio was 237% in FY24.
6. What was the total dividend per share declared by Tech Mahindra for FY24?
Tech Mahindra declared a total dividend of ₹40 per share for FY24.
7. What was the new deals total contract value (TCV) secured by Tech Mahindra in FY24?
Tech Mahindra secured new deals with a TCV of $1,880 million in FY24.
8. What was Tech Mahindra's headcount as of FY24?
Tech Mahindra had 145,455 employees as of the end of FY24.
9. What percentage of Tech Mahindra's workforce were women in FY24?
Women comprised 33.12% of Tech Mahindra's total workforce in FY24.
10. What percentage of positions were filled internally by Tech Mahindra in FY24?
Tech Mahindra filled 70.29% of positions internally in FY24.
11. What was Tech Mahindra's EBITDA margin in FY24?
Tech Mahindra's EBITDA margin was 9.6% in FY24.
12. What was Tech Mahindra's cash conversion ratio (free cash flow as % of PAT) in FY24?
Tech Mahindra's cash conversion ratio was 237% in FY24.
13. What was Tech Mahindra's employee attrition rate in FY24?
Tech Mahindra's employee attrition rate was 10% in FY24.
14. What was Tech Mahindra's people utilization rate in FY24?
Tech Mahindra's people utilization rate was 86.4% in FY24.
15. What was the reduction in Tech Mahindra's Scope 1 and 2 GHG emissions compared to FY16?
Tech Mahindra achieved a 31% reduction in Scope 1 and 2 GHG emissions compared to FY16.
16. What percentage of Tech Mahindra's energy consumption was from renewable sources in FY24?
22.96% of Tech Mahindra's energy consumption was from renewable sources in FY24.
17. What is the final dividend per share recommended by Tech Mahindra's Board for FY 2023-24?
The Board has recommended a final dividend of ₹28 per share.
18. What is the total dividend per share for FY 2023-24?
The total dividend for FY 2023-24 is ₹40 per share, including the interim dividend of ₹12 per share.
19. When will the final dividend be paid?
The final dividend is proposed to be paid on or before August 9, 2024, subject to shareholder approval.
20. What is the dividend payout ratio?
The total dividend of ₹40 per share represents an 800% payout.
21. When will the share transfer books remain closed?
The share transfer books will remain closed from July 20, 2024 to July 26, 2024.
22. Who will be eligible to receive the final dividend?
Shareholders whose names appear in the register of members/list of beneficial owners as on July 19, 2024 will be eligible.
23. How can shareholders update their bank details for dividend payment?
Shareholders need to update their mandate for receiving dividends directly in their bank accounts through ECS or other electronic modes.
24. What are the tax implications on the dividend?
Dividend is taxable in the hands of shareholders, and TDS will be deducted as per applicable rates.
25. What if shareholders have not encashed previous dividend warrants?
Shareholders who have not encashed dividend warrants from FY 2016-17 onwards are requested to claim them immediately.
26. How can shareholders avoid TDS on the dividend?
Resident shareholders can submit Form 15G/15H to avail the benefit of non-deduction of tax, while non-residents can claim treaty benefit
27. How many countries does Tech Mahindra operate in?
Tech Mahindra operates in over 90 countries worldwide.
28. What is Tech Mahindra's parent company?
Tech Mahindra is part of the Mahindra Group, one of the largest conglomerates in India.
29. What industries does Tech Mahindra serve?
Tech Mahindra serves clients across various industries, including telecom, manufacturing, healthcare, and financial services.
30. What are some of Tech Mahindra's key acquisitions?
Tech Mahindra has acquired companies like Satyam, Comviva, The BIO Agency, and Perigord Asset Holdings to expand its capabilities.