Hi, Often investors prefer to invest in dividend-paying stocks as dividends become a source of passive income for them.
So today we will tell you about 4 such companies whose ex-dividend dates are coming near.
The ex-dividend date is like a deadline.
To be eligible for the dividend, investors must purchase the company's stock before the ex-dividend date, otherwise not be eligible for the dividend.
The most important metric to find out about any company's dividend is the dividend yield.
Dividend yield is a ratio that shows how much dividend a company has paid relative to its market value.
To calculate a company's dividend yield, we divide the dividend per share by its current market price.
We have considered those stocks whose:
To calculate the dividend yield, we have considered the price given at market closing on 8th August 2022 i.e. Monday.
We will cover the list in ascending order of dividend yield, that is, the company with the highest dividend yield, which we will cover it at the end.
So let's start with today's dividend alert.
The first company is Motherson Sumi Wiring India Limited i.e, MSWIL.
Motherson Sumi Wiring is a joint venture company of Sumitomo Wiring Systems, Japan, and Motherson Group.
It was spun off from Motherson Sumi Systems Ltd (MSSL) in January 2022 to form a separate domestic wiring harness business and was listed at the end of March this year.
A wiring harness or cable harness is a group of electrical cables or wires that help pass electrical signals from one place to another in a system.
The company's products also ensure that the power supply and data transfer are working properly in a vehicle.
This becomes very important for the safety and reliability of a vehicle.
It is a leading player in the wiring harness industry with around 40% market share in India, which derives 95% of its revenue from the domestic market.
This also means that they directly benefit from the recovery of India's automotive sector as they have significant exposure to the domestic personal vehicle segment.
It is paying Rs. 0.85 dividend per share and its ex-dividend date is 12th Aug i.e. if you buy the shares on or before 11th Aug then you will be eligible for the dividend.
The dividend yield is around 1.08%
A major advantage for the company is the strong support from its parent companies Sumitomo Wiring Systems (SWS) and Motherson Group.
Motherson Sumi Wiring India gets financial and technical assistance as per the requirement of these two companies.
In addition, the company enjoys good profitability which can primarily be considered a result of efficiency improvements and scale.
This strong performance of the Company is reflected in our industry-leading gross margin, EBITDA margin, and EBIT margin.
Companies use gross margin indicators to relate their cost of production to revenue. You can see the formula to calculate Gross Margin on your screen.
EBITDA margin or earnings before interest, tax, depreciation, and amortization, and EBIT margin (full form is Earnings Before Interest and Taxes)
A measure of comparing a company's operating profit to revenue.
EBITDA/EBIT margin helps you to compare the profitability and performance of one company with the performance of another company.
You must know, that the automotive industry is currently going through a phase of disruption in terms of electrification and autonomous vehicles.
And Motherson Sumi Wiring India's core business is Wiring Harness, which is well placed to take advantage of disruptions as the company continues.
A major risk factor for the company is the increasing competition in the sector.
Industry players such as Yazaki India can make profit margins equal to the pressure from the company.
Also, it is not possible for the company to take entry into the market where the parent company is already doing.
For eg, Motherson Sumi Wiring cannot cater to Korean OEMs (Original Equipment Manufacturers) in India as it already has a joint venture with Kyungshin Industrial Co. South Korea.
This arrangement can become a hindrance to the business and growth opportunities of the company.
Let us now take a look at the financial and technical ratios of the company.
The second company is Fiam Industries Limited.
Fiam Industries was originally incorporated as Rahul Auto Private Limited.
It is primarily involved in the business of manufacturing and supplying auto components such as automotive lighting, signaling equipment, and rearview mirrors.
The company covers a 27-30% market share of the two-wheeler headlamp market.
The major customers of the company are Ola, Honda, Yamaha, TVS, Tata Marcopolo, Royal Enfield, etc.
It has declared Rs. 20 Dividend per share and its ex-dividend date is 12th Aug i.e. if you buy the shares on or before 11th Aug then you will be eligible for the dividend.
The dividend yield comes up to around 1.19%.
One good thing for the company is its strong growth numbers.
Despite the ongoing challenges in the auto sector, the company has shown double-digit sales growth for the last 10 years.
Along with this, the company's profit has grown at a CAGR of 16% in the last 10 years.
Fiam has reduced its long-term borrowings from ₹119 crores in 2017 to ₹7.52 crore in 2022.
In addition, the company is able to make more than a 10% operating margin.
A major challenge for the company is the ongoing supply side issues in the auto sector.
After the pandemic was over, companies slowly started showing growth. But this same growth was not being seen in the form of output.
The main reason for this is the lack of semiconductor chips running on the supply side and other supply chain disruptions.
The ongoing China-Taiwan tensions may create more problems in the future.
Due to all these factors, if the slowdown in the auto sector continues, then its effect can be seen on the operation of the firm.
Let us now take a look at the financial and technical ratios of the company.
The third company is Alembic Pharmaceuticals Ltd.
Alembic Pharmaceuticals is in the business of development, manufacturing, and marketing formulations and active pharmaceutical products.
The company has 3 R&D and 5 manufacturing facilities.
The company operates in therapeutic segments such as anti-infective, gynecology, cardiology, diabetes, dermatology, and oncology.
The company has declared Rs. 10 Dividend per share and its ex-dividend date is 17th Aug i.e. if you own shares on or before 16th Aug then you will be eligible for the dividend.
The dividend yield is around 1.51%.
The company's diversified and vertically integrated operations are a huge strength for them.
Their business is mainly divided into 3 broad business segments.
(i) Branded formulations i.e. sale of formulations in the domestic market,
(ii) the international generic formulation, that is, the sale of the formulation in the export markets
(iii) Active Pharmaceutical Ingredients i.e. APIs, catering to both domestic and export markets.
These segments account for about 32%, 53%, and 16% of the revenue respectively.
This is to some extent an indication of a diversified revenue stream.
If we talk about geographical diversity, they have a presence in several major regulated and unregulated markets.
About 29% of the company's revenue comes from the US market.
But a challenge for the company at present is regulatory hurdles in the commencement of commercial operations of many of their new projects.
A few years back, Alembic Pharma started setting up 3 new manufacturing facilities to cater to regulated markets.
Management says that all these facilities are ready for manufacturing
but yet to get regulatory approval from the United States Food and Drug Administration (USFDA), which is delaying operations.
Let us now take a look at the financial and technical ratios of the company.
The fourth company is LG Balakrishnan & Brothers Ltd.
LG. Balakrishnan & Bros is a leading manufacturer of chains, sprockets, and metal parts for automotive applications.
In FY2022, it generated 80% of its revenue through products like chains, sprockets, tensioners, belts, and brake shoes, and the rest from the metal forming segment.
The company has declared Rs. 15 Dividend per share and its ex-dividend date is 17th Aug i.e. if you own shares on or before 16th Aug then you will be eligible for a dividend.
The dividend yield comes up to around 2.24%.
The company has a dominant position in the two-wheeler chain segment.
LG Balakrishnan & Bros primarily manufactures and markets the two-wheeler chain and its allied components and generates 80% of its revenue through the issuance segment.
The company is an established player in this segment and holds around 70% market share.
In addition, with the help of various cost optimization initiatives, the company has improved its Operating Profit Margin (OPM) from 3% in the margin in FY22.
The company's revenue may take a hit in the mid to long term due to the electrification taking place in the two-wheeler auto industry.
The use of chains in electric two-wheeler vehicles is less compared to internal combustion-driven two-wheelers.
The company has made various plans for the diversification of its products so that its reliance on the auto industry for revenue can be worked out.
At the same time, volatility in steel prices could also prove to be a risk for LG Balakrishnan and Bros as it is a major raw material for them.
Now you can see the key financial and technical ratios of the company on the screen.
So these were the 4 companies whose ex-dividend date is nearing, and whose dividend yield is more than 1%.
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