Oil and gas sector leads profit pool, says Motilal Oswal report

The oil and gas sector has emerged as one of many largest contributor to the general profit or dividend pool, mentioned Motilal Oswal Financial Services in a report.

According to MOFSL report ‘Payouts’, the oil and gas sector was the most important contributor to the general profit pool of about 22 per cent, whereas know-how was the most important payout contributor to the general payout pool at 20 per cent over FY10-20.

The report offers an in depth evaluation into one of many key options to capital allocation – ‘Payout to shareholders’ – to grasp its significance in shareholders’ worth creation.

“Over FY10-20, 186 companies under MOFSL universe have delivered an average payout ratio of 41 per cent with shareholder CAGR return of 8 per cent.”

“MOFSL analysed these companies to understand the impact of payouts ratios in creating shareholder value over the last decade.”

As per the top-six sectors that contributed excessive payout ratios are “Mining (75 per cent), Consumer (70 per cent), Technology (58 per cent), Utilities (50 per cent), Media (41 per cent) and Capital goods (40 per cent)”.

“Divergence in profit pool and payout pool of companies is primarily due to varying level of capital intensity across different sectors.”

“MOFSL analysis suggest that Consumer and Technology sector have lowest capital intensity.”

Accordingly, the evaluation of corporations below the MOFSL universe over FY10-20 means that ‘Consumer and Technology’ sectors have generated an total shareholder return of 19 per cent and 13 per cent CAGR.

“This is way greater than the general shareholder return for the MOFSL universe at 8 per cent CAGR.

“Further, over FY16-20, more (including a few new) sectors are coming into the limelight – Capital Markets, Consumer, Diagnostics, Insurance, Internet, Mining and Utilities – and are showing signs of the ‘Winning Troika’.”



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