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NTPC Dividend to Rise Despite Falling Earnings
21 Aug
Summary
- NTPC's dividend is projected to rise in FY27 while EPS declines.
- This contrasts with FY20, when lower EPS saw a dividend shortfall.
- The FY27 forecast suggests a higher payout ratio despite earnings dip.
NTPC Ltd. is anticipating an unusual fiscal year in FY27, with projections showing a rise in dividends alongside a decline in earnings per share (EPS). This divergence from historical patterns, particularly FY20 when a drop in EPS also saw a dividend miss, is a key focus.
Forecasts from Bloomberg data suggest NTPC's dividend will reach a new high of Rs 9.42 per share in FY27, an increase from Rs 9 in FY26. Concurrently, EPS is expected to decrease by 6.6% to Rs 26.07 in FY27 from Rs 27.90 in FY26.
This upward trend in dividends, despite falling earnings, is attributed to an increase in the payout ratio. Bloomberg estimates imply NTPC will distribute 36.11% of its earnings in FY27, up from 32.26% in FY26, allowing the dividend to grow even with lower profits.
The FY20 performance serves as a crucial reference point. In that year, EPS fell, and NTPC's actual dividend of Rs 3.15 significantly missed Bloomberg's estimate of Rs 5.49. The FY27 forecast, however, points to a different outcome, with an expected rise in dividend.
