Lakshmi Mills Dividend 2026: ₹10 Paid, Yield Only 0.13%

Lakshmi Mills Company Limited (BSE: 502958 | NSE: LAKSHMIMIL | ISIN: INE938C01019) paid shareholders a final dividend of ₹10 per share for FY2025-26. The headline reads "10%", but at the current price the real yield is only 0.13%. Behind the payout sits a loss created by a tax-regime switch, a 45% jump in operating profit, and an investment book worth more than the company's entire market value.

Incorporated in 1910 in Coimbatore, Lakshmi Mills Company Limited is the original flagship of the Lakshmi group, whose associates include LMW Limited (formerly Lakshmi Machine Works). The company spins cotton and polyester-blended yarn in fine counts, trades cloth and garments, and rents out property it owns.

The core business got better. The bottom line got worse only because of tax accounting. When the company moved to the lower tax regime under Section 115BAA, it had to write off ₹21.20 Cr of deferred tax, including a ₹9.18 Cr MAT credit it can no longer use. No cash left the company for this charge. The company publishes standalone results only, so standalone figures are used throughout.

Q1 FY27 was the cleanest quarter in three years. Revenue rose 8.4% to ₹59.72 Cr, operating margin reached 14.3%, and net profit was ₹3.11 Cr, compared with a ₹22.03 Cr loss a year earlier. Interest cost fell to ₹2.14 Cr from ₹3.23 Cr because of lower debt.

Rental is now the profit engine. In Q1 FY27 it produced 79.6% of segment profit (₹5.54 Cr of ₹6.95 Cr) at an 80.7% margin. In February 2026 the board approved a ₹91 Cr rental project, which will compete with dividends for cash over the next few years. Exports fell 19% to ₹27.38 Cr in FY26, and that remains the main weakness in the textile business.

The outflow is 0.13% of market capitalisation and 0.12% of the investments on the balance sheet. It is a token payout rather than a meaningful return of capital. It is still the first dividend after two years of nil payouts.

At its meeting on 18 May 2026, the board approved the audited FY26 results and recommended a final dividend of ₹10 per equity share of ₹100 each, subject to tax deducted at source. The 116th AGM was held by video conference on 25 September 2026, and all four resolutions passed with 5,18,778 votes in favour and 7 against.

Turnout tells its own story. Promoters voted 99.998% of their shares. Public institutions voted none of their 22,150 shares. Public non-institutional holders voted only 28% of theirs. The company has not disclosed a payment date. Under the Companies Act, 2013, a declared dividend must be paid within 30 days of declaration.

The record date has passed. Shareholders whose names were on the register on 18 September 2026 were eligible. There were 5,585 shareholders on that date. Anyone who bought shares on or after the ex-date will not receive this dividend. Holders who have not received the credit by late October should first check the bank details registered with their depository participant or with the registrar, MUFG Intime India.

The yield is low for a simple reason: the stock trades at 76% of book value, and most of that book is investments that pay the company little in cash. A weak share price did not create this yield. The dividend itself is small.

Lakshmi Mills paid a dividend in 9 of the last 12 financial years. It skipped FY20, FY24 and FY25. Over FY17–FY26 it paid ₹82 per share in total, an average of ₹8.20 a year. The peak was ₹25 in FY22, the year of the textile boom, when net profit reached ₹24 Cr.

Payouts have not tracked earnings. The company paid dividends in the loss years FY19 (₹5) and FY23 (₹9), then paid nothing in FY24 and FY25. Classification: Irregular Payer. FY26’s ₹10 restarts dividends after a two-year gap, but it is still below the FY21 and FY22 levels.

EBITDA rose, but operating cash flow fell 71%. Operating cash flow was only 22% of operating profit because inventory days climbed from 77 to 124 and debtor days from 33 to 41. Most of the ₹52 Cr of debt repayment was paid for by the ₹55 Cr investing inflow, which points to asset or investment sales. FY26 free cash flow of ₹2 Cr still covers the ₹0.70 Cr dividend 2.9x. The dividend is funded from current earnings and reserves, not borrowings. Source: Screener.in.

Investments cover the dividend outflow roughly 857 times. Balance-sheet capacity is not the constraint. What holds dividends back is how much the company chooses to pay.

Verdict: Moderately Sustainable. A ₹0.70 Cr payout is easy for the company to afford. But the dividend record is irregular, working capital is absorbing cash, and the ₹91 Cr rental capex is still ahead. There is no guarantee the dividend will be repeated next year.

Lakshmi Mills has the lowest yield and the weakest returns in this group. Ambika Cotton, which also spins fine counts, yields 18x more. The one area where Lakshmi Mills stands out is asset backing: it trades at 0.76x book, compared with 0.93x for Ambika.

Promoter holding has risen steadily, from 60.27% in March 2017 to 65.93% in June 2026. With so much value kept inside the company, promoters gain more from the growing book value than from dividends. For minority holders, the fair-value gains on the balance sheet do not reach them as cash.

Dividends are taxed at your income-tax slab rate. Companies deduct 10% TDS for resident individuals when dividends from one company exceed ₹10,000 in a financial year. From 1 April 2026 this rule sits in Section 393(1) of the Income-tax Act, 2025, which replaced the old Section 194. If you have no PAN on record, TDS is 20%.

• Weak cash conversion: operating cash flow was only 22% of operating profit in FY26, as inventory days reached 124.
• Export decline: exports fell 19% to ₹27.38 Cr, leaving the company more exposed to domestic yarn prices.
• Capex competing with dividends: the ₹91 Cr rental project could absorb cash or push debt back up.
• Market-value swings: much of the net worth is equity investments at fair value, so book value moves with stock markets.
• Irregular payouts: the company skipped three of the last seven years, so FY26 does not set a pattern.
• Liquidity: the stock often trades fewer than 100 shares a day, so entry and exit prices can be poor.

• Inventory days: whether they come back from 124 towards the FY25 level of 77.
• Rental segment profit: whether Q1 FY27’s ₹5.54 Cr quarterly run-rate holds.
• ₹91 Cr project funding: how much comes from debt and how much from internal accruals.
• Q2 FY27 results (due November 2026): whether operating margin stays above 12%.
• Movement in the investment book: the size of fair-value gains or losses in other comprehensive income each quarter.
• Payment confirmation: that the dividend is credited by 25-Oct-2026.
• Export revenue: whether exports recover from the FY26 level of ₹27.38 Cr.

The ₹10 final dividend for FY26 looks generous as a “10%” headline and paid out of a reported loss. In reality it is a 0.13% yield. The underlying business earned about 8x the payout once the one-time tax charge is excluded.

This article is for educational and informational purposes only. It is not investment advice or a recommendation to buy, sell or hold any security. ShareBazaar Online is not registered with SEBI as an investment adviser or research analyst. Figures come from company filings with BSE, Screener.in, Trendlyne and ScanX as of 28 September 2026 and may change. Ex-date and payment date are inferred where stated. Tax rules are summarised and depend on individual circumstances, so consult a qualified tax professional. Please do your own research before making any investment decision.