The case “Dividend policy at Hindustan Petroleum Corporation” talks about the reasons that led to Hindustan Petroleum Corporation Limited (HPCL)’s share price showing a declining trend in the financial year 2017-18. The case starts out with a brief history of HPCL. It then outlines the dividend payment history of the company and describes in detail the amount of dividend paid by HPCL and the trend in dividend payment from 2013-2018. The case also covers the business performance of the company in relation to dividend distributed over the five-year period. Besides, it highlights the impact of dividend distribution and bonus issue on the share price of HPCL. The case then goes on to provide details about the dividend history of HPCL’s competitors. It concludes by asking the reader to explore the options in front of HPCL that will help it to stabilize the share price movement...
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The case is structured to achieve the following teaching objectives:
Examine the effect of dividend policy on the share price of a company.
Identify the link between dividend and share price.
Identify the factors responsible for the decline of the stock price of a company.
Analyze the impact of dividend distribution on the business performance of a company.
Understand the share valuation models of a company.