Maruti distributes over a third of its profit as dividend since FY17

With the highest-ever dividend of Rs 90 per share for FY23, Maruti Suzuki, the country’s largest carmaker, has been distributing more than a third of its net profit as dividend over the past seven years. The total dividend for the year aggregates to Rs 2,719 crore, an increase of 50 percent over the last financial year.

Interestingly, the increase in dividend payout comes at a time when the stock has been faring poorly on the bourses, amid concerns over persistent slowdown in the small car segment. The stock, once the darling of Dalal Street, has yielded a negative return of 1.1 percent over the last five years against Nifty50’s gain of 11 percent during the same period. Indeed, Maruti Suzuki shares have underperformed the benchmark Nifty50 consistently in four years through 2021. Moreover, it is currently trading at about 15 percent lower to its record high of Rs 10,000, that it hit in December 2017.

However, despite an increased payout in absolute terms, the payout ratio for FY23 stands lower at 33.8 percent against last year’s payout ratio of 46.7 percent. The company had doled out Rs 1,812 crore as dividend in FY22 on a lower profit of Rs 3,766 crore. The payout ratio for the current financial year stood at 33.8 percent, according to Bloomberg data.

Dividend Payout Ratio (%)

FY17 - 30.2

FY18 - 30.7

FY19 - 31.6

FY20 - 31.9

FY21 - 31.0

FY22 - 46.7

FY23 - 33.8

Source: Bloomberg

The net profit of the company has more than doubled to Rs 8,049 crore in FY23, propelled by higher sales volume and improved realisation from the market. Further, a weaker yen also boosted company’s bottom-line as it lowered sourcing cost for parts imported from Japan.

Shares of Maruti Suzuki rose 0.50 percent on Wednesday, to end the session at Rs 8,506.90 on NSE. The stock has come off 3.2 percent over the last three months against Nifty50’s gain of 1.2 percent during the same period.