Tata Investment Corporation: Compelling Cash Flow and Dividend Payouts ; here’s why?

Tata Investment Corporation Limited (TICL), a non-banking financial company that primarily invests in long-term investments, such as equity shares and equity-related securities, has reported a positive cash flow from investing activities of Rs 62.72 crore for the financial year 2022-23.

This was primarily driven by the purchase of investments worth Rs 3017.12 crore crores in various assets, demonstrating its dedication to wealth creation. Simultaneously, it strategically capitalized on market opportunities, realizing proceeds of Rs 3261.56 crores from the sale of investments, showcasing its acumen in optimizing its investment portfolio. In FY23 company has also taken a bold step during the year by committing INR 150 crores as application money towards the issuance of Cumulative Compulsorily Convertible Preference shares in its subsidiary.

TICL also placed a deposit of Rs 31.50 crore and an intercorporate deposit of Rs 2 crore. However, the intercorporate deposit was withdrawn during the period. The cash flow from investing and its dividend is compelling.

For the financial year ended March 2023, TICL declared a dividend of Rs 48 per share of face value Rs 10 and translates into a dividend yield of 1.78% at the current share price. TIC has a long history of paying dividends, and it has consistently increased its dividend payout over the years.

TICL’s ability to pay dividends is supported by its strong financial performance. The company has a diversified investment portfolio, which helps to reduce risk and generate consistent returns. TICL also has a healthy balance sheet and a strong track record of cash flow generation.

TICL was promoted by Tata Sons Pvt Ltd and became one of the few publicly held investment companies listed on the Stock Exchange, Mumbai, in 1959. The company’s original purpose was to help set up and nurture small and medium-sized entrepreneurs and their companies. TICL played a catalyst in promoting long-term investments in India and formed many well-known companies, including Associated Bearing Co Ltd., Ceat Tyres Ltd., National Rayon Corporation, and companies promoted by the Ghia family.

The company’s activities comprise primarily of investing in long term investments in equity shares, debt instruments, listed and unlisted, and equity related securities of companies in a wide range of industries. The major sources of income of the Company consist of dividend, interest and profit on sale of investments.

TICL stock trading at Rs 2728.45, up 1.34% from the previous close. The 52-week high for the stock is Rs 2860.85 and the 52-week low is Rs 1735.00. The company’s market capitalization of around Rs 13,800 crore.