What are Tata Sons’ plans with income earned from TCS dividend?

India’s largest I.T. company, Tata Consultancy Services Ltd., announced a record dividend to shareholders so far in fiscal 2023.

The company has announced a special dividend of Rs 67 per share along with an interim dividend of Rs 8 per share for the third quarter of FY23. This brings the total dividend for the quarter to Rs 75 per share.

The parent, Tata Sons, holds over 264 crore shares in TCS, leading to a total dividend income of Rs 19,832 crore in the third quarter of FY23. This is up and over the two interim dividends of Rs 8 each announced in the first half of FY23, bringing the total dividend, so far, to Rs 91 per share in FY23.

TCS’ total shareholder payout to date stood at Rs 33,297 crore in the current fiscal.

Other than the current financial year, the highest-ever dividend paid by TCS was in FY15, when it paid Rs 79 apiece to shareholders, and in FY20, where the dividend per share stood at Rs 73.

Where Will Tata Sons Utilise The Funds?
Analysts are expecting Tata Sons to utilise dividend income across the digital and consumption sectors, along with investment in the state of Uttar Pradesh. Tata Sons is also expected to utilise some portion of the dividend income to build its super app, Tata Neu, and the ecosystem around it, and will look to strengthen its distribution network.

Tata Sons had previously invested Rs 5,882 crore in Tata Digital in April 2022. So far, the conglomerate has invested Rs 6,400 crore into Tata Digital. They also believe the bulk of the funds would be kept for inorganic acquisitions in the food and beverage category. Some analysts are of the view that the group will utilise the funds for their investment plans in Uttar Pradesh.

Group companies, led by Tata Motors, including Tata Power and Tata Steel, are planning to invest in electric vehicles and renewable energy.

Tata Power has a planned capex of Rs 14,000 crore, of which Rs 10,000 crore will be invested by its renewable energy subsidiary in fiscal 2023. The company has also outlined a capital expenditure plan of over Rs 75,000 crore in the renewable energy sector for the next five years.

In the auto sector, Tata Motors plans to spend Rs 32,000 crore on capex. After riding the EV wave, the Tata Group plans to foray into the semiconductor industry. Bloomberg