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BPCL Dividend | Impact on Futures & Options | CA Rachana Ranade - YouTube
Channel: CA Rachana Phadke Ranade
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Hey folks CA Rachana Ranade here and I welcome聽
you all to a very interesting video which is about聽聽
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BPCL dividends. I am sure every one of you might聽
have had that pain when you are at a petrol pump,聽聽
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where every single time you go to fill聽
up petrol in your car or in your bike聽聽
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,you have to shell out extra money every single聽
time because of the rising prices of petrol聽聽
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and I am sure that's how even your face might聽
have looked like when you pay extra money every聽聽
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time. But you know there are some smart people who聽
instead of giving money to companies like BPCL,聽聽
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they love to take money from companies like BPCL聽
and those investors look something like this.聽聽
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I am sure everyone knows that BPCL has declared聽
a handsome dividend but then what is the record聽聽
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date, what is dividend, when are you going聽
to get that money, who will be eligible to聽聽
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get that money and many more questions are聽
going to be answered in this video itself.聽聽
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Before we move on I just wanted to tell you that聽
we are going to talk about one very important聽聽
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topic, which is impact of dividend on futures聽
and options prices, this part is going to come聽聽
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near the end of the video so don't just drop聽
off in between watch, this video till the end.
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I know this is a very basic part, but I need聽
to start with this for those who are absolute聽聽
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newbies. The very first point is, what is聽
dividend? Okay so, whenever you invest in聽聽
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shares of any company you become the owners of聽
the company, whenever the company makes profit,聽聽
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ideally company should pass on some part聽
of the profit at least to its shareholders,聽聽
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is it mandatory for the company to pass on聽
the profit to the shareholders as dividend聽聽
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?answer is no, but would the shareholders be聽
happy if they get a part of dividend answer聽聽
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is obviously yes. Right so, this聽
proportion or this part of profit聽聽
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which is paid by the company to the聽
shareholders is known as dividend.
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Recently when the company share price was聽
around 478 rupees, that was the time when聽聽
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the company declared this heavy dividend of almost聽
58 rupees. Now I am sure you might be wondering,聽聽
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this is almost a dividend yield of 12 percent,聽
for those who don't know what is dividend yield,聽聽
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how is it calculated; it's as simple as dividend聽
amount divided by current market price, it's聽聽
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coming somewhere around to 12. So you might be聽
wondering that every single time, is such a heavy聽聽
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dividend paid by the company to the shareholders聽
answer is no. I just want to screen out where can聽聽
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I check what is the dividend yield on an average,聽
it's coming to still nine point something percent.聽聽
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So isn't that also very good dividend yield,聽
still answer is yes. Then you you should be surely聽聽
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thinking about a fact that why would a company聽
give so much of dividend year on year, is there聽聽
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a specific reason behind this ,answer is yes.聽
Please try and understand this very carefully.聽聽
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BPCL is a government company okay, government聽
company means what government owns more than 50聽聽
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shares in BPCL right, now you only聽
tell me when BPCL decides that聽聽
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they are going to pay out dividend to the聽
shareholders, who is their largest shareholder,聽聽
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government. So in simple words whenever聽
a government company declares dividend,聽聽
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maximum dividend goes in whose hand, in the hands聽
of the government itself. In fact, it is said that聽聽
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to reduce the deficit, many a times government聽
recommends, I am not saying forces government聽聽
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recommends the government companies to pay out聽
dividend right. So I hope you have understood聽聽
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why government companies generally give higher聽
rates of dividends okay, you can also do that as聽聽
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a homework, which other companies which are the聽
government companies give a lot of dividend and聽聽
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after you complete the homework let me know in the聽
comments section right. One last question is that,聽聽
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agreed nine percent is a normal dividend聽
yield which is given by BPCL, then why this聽聽
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time almost 12 percent dividend yield, is there聽
any specific reason behind this? Answer is yes聽聽
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,that is exactly what we are going to聽
discuss in the next part of the video.
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Now let's try and understand why BPCL gave such聽
a hefty dividend. The reason is very simple, they聽聽
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had a fantastic quarterly result. Let's understand聽
how much was the profitability position. In Q4聽聽
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FY 2021, their profit was 11,940 crores and if聽
I compare this as a YOY, Q4 FY 2020, they had聽聽
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a loss of 1847 crores. Such a huge jump in profit聽
and if they're going to have such a huge jump,聽聽
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aren't they going to distribute,聽
aren't they going to celebrate this,聽聽
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by paying off dividend to the shareholders, answer聽
is yes. But I am sure you might be wondering
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What happened because of which the profitability聽
just zoomed up like anything? The reason is聽聽
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also very simple, the bottom line that is PAT,聽
included a one-off component, one of means what,聽聽
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it is not a recurring in nature component聽
okay, once in a lifetime kind of a component聽聽
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wherein the company sold its 61.5 percent聽
stake, they sold their 61.5 percent holding聽聽
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in what in Numaligar refinery, okay they had聽
a refinery, they sold 61.5 percent stake in聽聽
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that refinery for 9422 crores. I hope you are聽
understanding this was one of the unique items聽聽
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because of which their PAT profit of attacks,聽
just zoomed up and to celebrate this profit they聽聽
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declared a dividend, dividend of how much? 58聽
rupees per share. Now this 58 rupees per share,聽聽
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they also divided into two parts, which two parts聽
? 23 rupees was declared as an ordinary dividend聽聽
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and 35 rupees was declared as a one-time聽
special dividend okay. When I read this聽聽
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for the first time, I was like why聽
have they bifurcated in this way,聽聽
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maybe they wanted to tell the shareholders that聽
don't get used to such heavy dividends, that 23聽聽
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rupees is on an ordinary dividend but the major聽
component 35 is like a one-time special dividend,聽聽
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so that's not going to happen every single year.聽
But very important additional point what is that,聽聽
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in addition to this 58 rupees dividend the company聽
also declared 16 rupees as a dividend in February聽聽
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and 5 rupees dividend in the month聽
of March so the total dividend which聽聽
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BPCL declared in this financial year was 79聽
rupees per share. Isn't that huge, I guess so.
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Before we move on, let me tell you that this聽
piece of information about BPCL declaring a聽聽
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heavy dividend and its impact on the futures and聽
options is really important. So I would really聽聽
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love if this video reaches out to lots and lots聽
of people, can you help me in, that answer is yes.聽聽
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How do you do that, just hit the like button聽
see number of more and more likes on the video,聽聽
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YouTube algorithm understands oh people are聽
loving this video why not recommend it to others,聽聽
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so this video would come up more into the聽
recommendations. So if you want to help聽聽
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your friends and family members just聽
don't forget to hit the like button.
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Now the big question in your mind is that,聽
am I eligible to get that dividend or not,聽聽
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answer is why not? You still have time. There聽
are two important dates to understand this聽聽
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entire question, two Dates are number one record聽
date, number two is the ex dividend date okay.聽聽
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On the record date, shares must be there in your聽
portfolio okay, but what could be the last date,聽聽
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deadline before which I have to buy the聽
shares so that I am entitled to get dividend聽聽
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for that ex dividend date is very important okay.聽
In this case ex dividend is 16th of September 2021聽聽
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okay, what is the last date ,what is the deadline聽
before which you have to buy max to max by 15th聽聽
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of September, you have to buy the shares then聽
and only then will you be eligible to get the聽聽
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dividend. So if you are watching this video on the聽
day of release, you have almost one week in hand,聽聽
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if you were to buy the share just to get dividend,聽
I am not recommending you to buy only for the聽聽
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purpose of dividend because please understand what聽
will happen, on the x dividend date. Assume that聽聽
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the closing share price of BPCL on 15th September聽
is just as an example 458 rupees. Now what will聽聽
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happen, once the share was ex-dividend on 16聽
September, that 58 rupees proportion will be聽聽
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reduced and the theoretical price of BPCL聽
should be 400 rupees. So would you be in a聽聽
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loss of 58 rupees answer is yes, but is that an聽
actual loss, answer is no. Because the 58 rupees聽聽
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would be credited to your bank account and that聽
is where you will gain 58 rupees. I hope you are聽聽
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understanding this, that 58 rupees lost because聽
of the drop in share price but that will be聽聽
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compensated by the dividend which gets credited to聽
your bank account. Can the actual price, can the聽聽
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actual price be a bit different on 16th when it聽
goes ex-dividend answer is yes. I am talking about聽聽
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the theoretical x dividend price. I hope you have聽
understood this this was a little bit tricky part,聽聽
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if you have not understood this just rewind聽
this part of the video and watch it again.
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Now let's come to the very interesting part of the聽
video wherein we are going to talk about impact of聽聽
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dividends on futures prices. If you have zero聽
knowledge about futures maybe this part of the聽聽
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video might sound really alien to you but if you聽
know about futures, there's going to be something聽聽
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really interesting for you right, so just pay聽
attention. Assume that I am a person who has聽聽
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bought BPCL futures okay and what happens on 15th聽
September is that assume it closes at 493 rupees,聽聽
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now you'll ask me from where did you聽
get this 493, it is just an example聽聽
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okay, now what happens on the x dividend聽
date, x dividend date is 16th September.聽聽
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We have discussed about this during the video,聽
assume that it closes at 423, now you might be聽聽
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like why this huge gap, from 493 to 423, obviously聽
58 rupees was that dividend amount only, but聽聽
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is it necessary that the price will fall exactly聽
by 58? No, that is the theoretical price right.聽聽
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Practically as per demand and supply function it聽
might fall just less than 58 or even more than 58聽聽
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okay. So in our example, it has closed at 423.聽
Now you can imagine what could have happened聽聽
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to me. Now calculate the m to m losses for me,聽
what could be the losses 493 was the yesterday's聽聽
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closing price, versus 423 which is the current聽
day's closing price, today 16 September assume,聽聽
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so the loss is 70 rupees multiplied by how much聽
1800. Now what is 1800, lot size correct. So 17聽聽
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to 1800 the m to m loss a single day loss will聽
be 1 lakh 26 000 rupees, Now is this maddening,聽聽
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answer is obviously yes. Correct, now don't聽
you think that our exchanges, our regulators,聽聽
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might have thought about this possibility that聽
futures price might suddenly drop, because of the聽聽
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ex dividend impact yes and to protect the interest聽
of the buyer or the seller whatever is the case,聽聽
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the market has given certain adjustments or the聽
regulators or the markets, exchanges have given聽聽
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certain adjustments, if dividend is declared at聽
a very high rate. Now you might be like very high聽聽
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rate means what could you please give us some聽
example, so for that let me take you to this聽聽
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circular, I found the circular on the website聽
of NSC okay. What does this say let's quickly聽聽
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understand, I am just scrolling down and we聽
are on dividends, very clearly it is mentioned,聽聽
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the dividends which are below five percent聽
of the market value of the underlying stock,聽聽
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are we talking about dividend below five percent?聽
You remember we have calculated dividend yield聽聽
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on the day when dividend was declared, that was聽
somewhere around 12 point something if you can聽聽
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recall yes, so are we talking about below five聽
percent scenario or we should be talking about聽聽
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above five percent scenario, answer is obviously聽
above five percent scenario. So what does this聽聽
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NSC circular say that it should be, if it is聽
above five percent, what is above five percent,聽聽
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five percent of market value, whatever is聽
the amount if your dividend is exceeding聽聽
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five percent of the market value, then the聽
strike price or the value of the underlying聽聽
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security would be adjusted. So very clearly it聽
is given that it will be adjusted. Now adjusted聽聽
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in what case how what is what we are going to聽
understand with the help of an example but wait,聽聽
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if you can recollect what had BPCL done, they聽
had split the dividend amount into two parts.聽聽
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58 was divided into two parts one was the ordinary聽
dividend and one was a special one-time dividend,聽聽
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then what are we going to check so for that聽
if you focus on point number three it is again聽聽
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very clearly given, in case of declaration聽
of extraordinary dividend by any company,聽聽
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the total dividend, which total dividend special聽
and or ordinary, both have to be considered,聽聽
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in our example are we going to consider 58 in聽
totality yes, why, very clearly it is given total聽聽
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dividend that would be reduced from all the strike聽
prices of the options contract on that stock.聽聽
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Of course this is more about options, so if聽
you have understood this sentence, may be the聽聽
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next part of the video answer you already got,聽
but if you have not, don't worry. I am going to聽聽
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explain that as well. So till now what have you聽
understood? Is this very unfair for the buyer,聽聽
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yes it is. Okay, now let us go on to what will聽
happen with adjustment okay, so I am on this point聽聽
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with adjustment now, special consideration while聽
calculating m to m profit or loss if dividend is聽聽
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exceeding five percent is what we are discussing聽
now. Are we in the category of exciting five聽聽
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percent ,yes. So again let's understand how the聽
MTM is calculated. Here there is no change, 16聽聽
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September 423, same because it is today's closing聽
price, today I am assuming it is 16 September.聽聽
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Where is the problem, yesterday's closing price聽
is terribly higher than the current days closing聽聽
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price correct, so for that what is done is that,聽
the previous day's closing price of futures聽聽
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is assumed to be 493 minus 58 which is 435, you聽
will be like what 493 minus 58, I hope for those聽聽
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who are a little bit smarter they have already聽
understood. 493 was the actual closing price聽聽
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minus what the dividend amount, can I say it was聽
the dividend amount which caused that sudden pain,聽聽
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yes, so like we do in accounting ,any聽
extraordinary thing ignore, remove,聽聽
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same logic is applied here. So 493 minus this聽
extraordinary amount of 58 what we are left with聽聽
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is 435 that is the deemed previous day closing聽
for the purpose of calculating m tom losses,聽聽
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I am repeating this last sentence very important,聽
the previous days closing price is deemed to be聽聽
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435 for the purpose of calculating m2m losses聽
right. So now what will be the new m to m loss,聽聽
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simple, 435 is the deemed previous day closing聽
price minus 423 which is the actual closing price,聽聽
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which is equal to how much, that is equal to聽
12, 18000 is the lot size and now the loss is聽聽
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only twenty one thousand six hundred. Are you聽
understanding this, yes, so I hope for me who聽聽
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had bought futures in a single day, my loss would聽
have been one lakh twenty six thousand if there聽聽
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had been no circular ,because of the circular聽
I am comparatively okay now my m to m loss will聽聽
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be reduced at only 21 600. If you want you can聽
rewind this part of the video and revise again.
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Well I hope you have understood the impact聽
of dividend on futures prices very nicely,聽聽
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but if you just in case you have not understood聽
it there is a golden chance to learn through聽聽
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all the concepts about futures and options聽
right from scratch and all this is available聽聽
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on my website rachanaranade.com wherein you have聽
a special course on futures and options. I will聽聽
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be completing launch, I mean I will be completing聽
exactly one month from the date of launch which聽聽
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was 15th august and this 15th September will be聽
starting fading away our discounts. Currently it's聽聽
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available at a huge discount and just one week聽
remains for these discounts to start drying up,聽聽
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so if you still have not enrolled, here is an聽
additional coupon code for you it is CARRYT,聽聽
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so grab this opportunity and invest in knowledge.聽
So with that let's move on with impact of dividend聽聽
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on options. So if you remember we had talked聽
about this third point just few minutes ago聽聽
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wherein we said that, what will happen the聽
amount of dividend how much, entire amount聽聽
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ordinary as well as extraordinary put together,聽
will be reduced from, reduced from what, all the聽聽
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strike prices of the options contract on that聽
stock okay. Now what do we where can I find all聽聽
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the strike prices of a particular stock, for that聽
it's very simple, you have to go to nscindia.com聽聽
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and then you'll find the option chain, here聽
you can just go to BPCL, I am choosing that,聽聽
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once I choose this September 30th聽
expiry date is what I have chosen聽聽
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and here you can see all the expiry dates okay,聽
so currently the atm expiry is around 485,聽聽
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again you'll understand itm atm otm only if you聽
have learnt about futures and options okay. So聽聽
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current atm is 485 and assume that I have bought聽
a call at a strike price of 485 okay till here,聽聽
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now you can imagine what can happen on the x聽
dividend date, on 16th September what will happen,聽聽
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I bought it at 485 currently it was atm and聽
suddenly it goes down to I mean suddenly it聽聽
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goes down by how much, by 58 rupees. I had bought聽
a call, I was bullish and it went down by 58. Can聽聽
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I sell be again in a loss, yes why, because it has聽
went against my direction. Now what happens, as we聽聽
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discussed right now, are these option premiums聽
going to get impacted, are they going to change?聽聽
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answer is no. option premiums are not going to聽
change the strike price itself will change, so for聽聽
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me my strike price which was 485 will be changed聽
to 485 minus 58 which is 427 yes, which is 427聽聽
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on the x dividend date. So now what will happen,聽
my position, is it going to change, no it is still聽聽
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going to remain at atm at 427, of course with聽
demand and supply prices can change the positions聽聽
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might vary a little bit but not much,. I hope聽
you have understood what will happen in futures,聽聽
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in futures the m to m calculation will change and聽
in options the strike price itself will change.
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I hope you have enjoyed this video on BPCL聽
dividends, if you have don't forget to share聽聽
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it with your friends and relatives.聽
Please remember that don't invest in聽聽
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this stalk just because you're going to get聽
dividend, by now you might have understood聽聽
[1148]
that on one hand you will get a dividend聽
but on the other hand the stock price,聽聽
[1152]
F&O price, everything is going to get adjusted聽
right so if you believe in the fundamentals,聽聽
[1157]
then only you can think about investing in any聽
company right. That's it from my side take care聽聽
[1162]
educate yourself more and more by watching聽
more and more videos, Jai Hind and bye.
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