Bajaj Auto ends lower despite dividend distribution policy amendment

The shares of Bajaj Auto ended lower on Friday despite the announcement made by the auto-manufacturer that it has amended its dividend distribution policy with an intention to reward its shareholders and boost return ratios.  

The company had earlier said in an exchange filing that it would be taking into account the surplus funds available with the company and would arrive at a dividend payout as a percentage of profits after tax on the company's standalone financials.   

According to the new amendment, the dividend payout will be up to 90 per cent if the surplus funds are over Rs 15,000 crore, and if it has a surplus of Rs 7,500-15,000 crore, the payout will be up to 70 per cent. On a surplus of less than Rs 7,500 crore, the payout will be up to 50 per cent. Prior to the amendment, the policy referred to a dividend payout of around 50 per cent of profits after tax on standalone financials, to the extent possible.   

As of September 2020, Bajaj Auto was sitting on surplus funds of Rs 21,639.36 crore. This means the dividend payout ratio, which was earlier at 50 per cent, now moves up to 90 per cent.   

On Friday, the shares of Bajaj Auto closed at Rs 3,648.80, down by 0.40 per cent or Rs 14.65 per share, against a 1.30 per cent gain in the benchmark index. The 52-week high of the company is recorded at Rs 4,361.20 while its 52-week low is Rs 1,793.10.