PSUs show dividend fatigue in FY25

PSU payouts hit a decade low

- Mayur Bhalerao

India Inc. may have celebrated a record ₹4.9 trillion dividend bonanza in FY25, but the party was noticeably quieter in one corner: the public sector. Behind the headline numbers, state-run enterprises showed clear signs of dividend fatigue, both in payout ratios and growth. Dividends, which had seen strong double-digit gains in previous years, contracted, while payout ratios plunged to multi-year lows. The shift points to a change in priorities: public sector firms are increasingly favouring reinvestment, capital discipline, and long-term value creation over generous near-term distributions.

A Mint analysis of 496 BSE 500 companies, based on Capitaline data covering audited, unaudited and proposed dividends, shows that public sector undertakings (PSUs) accounted for just 30% of total dividends in FY25—down from 35% in the previous year. Their dividend payout ratio also dropped to 29.8%, the lowest since FY15 and well below the historical average of around 50%. In fact, these government-owned companies have seen a secular decline in their payout ratios over the past five years.