In the past year, India's market has experienced a significant upswing, rising by 43%, with earnings expected to grow by 16% annually. In this context, dividend stocks can be particularly appealing as they offer potential for steady income in addition to capital appreciation opportunities.
Overview: HCL Technologies Limited is a global company that provides software development, business process outsourcing, and infrastructure management services, with a market capitalization of approximately ₹3.61 trillion.
Operations: HCL Technologies Limited generates revenue primarily through three segments: HCL Software at $1.41 billion, IT and Business Services at $9.80 billion, and Engineering and R&D Services at $2.12 billion.
Dividend Yield: 3.9%
HCL Technologies, with a Price-to-Earnings ratio of ₹22.80, trades below the Indian market average of ₹30.20, indicating potential value relative to peers. Despite a 5.9% annual earnings growth over five years and a forecasted 9.25% future growth, its dividend track record shows volatility with an unstable history over the past decade but recent increases in payouts. Dividends are well-covered by earnings and cash flows, with payout ratios at 89.1% and cash payout at 65.1%, respectively; however, dividend stability remains a concern due to past fluctuations.
Overview: MPS Limited operates in content creation, production, and distribution for publishers, learning companies, and various institutions across India, Europe, the US, and globally with a market cap of approximately ₹28.22 billion.
Operations: MPS Limited generates revenue by offering content creation, production, and distribution services to publishers, learning companies, corporate institutions, libraries, and content aggregators across multiple regions including India, Europe, and the US.
Dividend Yield: 3.6%
MPS Limited, while offering a dividend yield of 3.61%, higher than the Indian market's 1.22%, faces challenges with its dividend sustainability due to a high cash payout ratio of 91.7% and earnings coverage issues. Despite having a lower Price-to-Earnings ratio at ₹23.80 compared to the market average of ₹30.20, suggesting potential value, its dividends have shown inconsistency and are not adequately supported by free cash flow or earnings growth, which is forecasted at an optimistic 20.32% annually. Recently, MPS recommended a final dividend of ₹45 per share for FY 2023-24, pending shareholder approval at the upcoming AGM.
Overview: Uniparts India Limited is a company that specializes in manufacturing and selling engineering systems, solutions, assemblies, and components for off-highway vehicles globally, with a market capitalization of approximately ₹22.04 billion.
Operations: Uniparts India Limited generates its revenue by manufacturing and selling engineering systems, solutions, assemblies, and components for off-highway vehicles across various global markets.
Dividend Yield: 4%
Uniparts India Limited's recent financial performance shows a decline, with yearly sales dropping from INR 13.66 billion to INR 11.40 billion, and net income decreasing significantly from INR 2.05 billion to ININR 1.25 billion. Despite these challenges, the company maintains a reasonable payout ratio of 62.6%, suggesting that its current dividend payments are sustainable under present earnings levels. However, the company’s Price-to-Earnings ratio at 17.7x remains attractive compared to the broader Indian market average of 30.2x, indicating potential value relative to peers despite its unstable dividend track record and recent financial downturns.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NSEI:HCLTECHNSEI:MPSLTDNSEI:UNIPARTS and
