Why NSE stands out as a ‘cash generation and distribution machine'? Zerodha's Nithin Kamath explains (opens original article in a new tab)

Zerodha's Nithin Kamath discusses why NSE is a rare example of a company with high cash generation and dividend payouts, attributing the trend to tax policies that favor reinvestment over dividend distribution.

• NSE generated over ₹10,300 crore in FY26 and distributed ₹8,660 crore in dividends, a payout ratio of 84%
• Kamath explains that tax on dividends creates a disincentive for companies to distribute profits, leading to reinvestment instead
• Reinvestment is preferred due to lower capital gains tax (14.5%) compared to dividend tax (up to 51%)
• Kamath highlights global examples where dividends are taxed at lower rates than regular income