Sandeep Kumar Chaudhary’s Method to Evaluate Dividend & Bonus Potential in NEPSE

learnwithopen .ai

Thu, 16 Oct 2025

In Nepal’s capital market, dividends and bonus shares are among the most awaited announcements every fiscal year. For many investors, these events drive excitement, speculation, and sudden market rallies — but only a few truly understand the deeper financial logic behind them. Sandeep Kumar Chaudhary, Nepal’s first complete technical and fundamental analyst, has introduced a structured and analytical approach to evaluate dividend and bonus potentialin NEPSE-listed companies. Through his educational platforms, MarketMind Investment Group and NepseBook, he teaches traders and investors how to move beyond rumors and emotional investing by using data, regulatory insights, and market behavior to identify which companies are likely to declare strong payouts even before official announcements are made.

According to Sandeep Kumar Chaudhary, dividend and bonus announcements are not random events — they are financial reflections of a company’s internal strength, management confidence, and compliance with regulatory frameworks. He often says, “Dividends are the result of discipline, not luck.” His method combines fundamental analysis, NRB policy interpretation, and technical confirmation, giving investors a holistic view of how payouts are determined and how to position themselves early for profit opportunities.

The foundation of his analysis begins with profitability and retained earnings. Sandeep closely studies a company’s earnings per share (EPS), net profit, and retained earnings over several fiscal years. He emphasizes that short-term profitability is not enough; consistent and stable earnings reflect a company’s genuine capacity to distribute dividends sustainably. For example, if a commercial bank maintains an average EPS above Rs. 20 with stable net profits over three years, it signals dividend consistency. Likewise, he checks whether the company’s retained earnings are growing — since dividends come from these reserves. A company with increasing retained profits, high Return on Equity (ROE), and efficient capital utilization has a stronger potential to issue both cash and bonus dividends.

Next, Sandeep integrates NRB directives and monetary policies into his analysis — a factor most retail traders overlook. He explains that Nepal Rastra Bank (NRB) sets strict rules on how banks and financial institutions distribute profits. For instance, NRB guidelines on capital adequacy ratio (CAR), Credit-to-Deposit (CD) ratio, loan loss provisioning, and liquidity management directly affect dividend decisions. When NRB enforces tighter rules, such as higher provisioning or reserve retention, banks are compelled to hold more profit internally, reducing the cash available for dividends. Conversely, when NRB relaxes monetary measures or liquidity improves, financial institutions are more confident to reward shareholders. Sandeep decodes these circulars and identifies which banks are fundamentally ready and regulatorily cleared to announce dividends — often weeks before market rumors begin.

He also evaluates capital structure and regulatory targets. In Nepal, many institutions issue bonus shares to meet NRB’s paid-up capital requirements. For example, if a development bank’s paid-up capital is Rs. 2.8 billion and NRB mandates Rs. 3 billion, a 7–8% bonus share is likely. Sandeep compares each company’s current paid-up capitalagainst regulatory minimum thresholds to predict which firms may use bonus distributions to bridge the gap. Similarly, he examines statutory and retained reserves, since these act as funding sources for dividends. A healthy reserve balance signals capacity for both cash payouts and capitalization through bonus shares.

Sandeep also studies sectoral profitability trends, knowing that dividend potential depends not just on company performance but on overall sector conditions. In the banking sector, for example, higher interest spread and liquidity inflows often translate into stronger dividends. However, when NRB tightens monetary policy or credit expansion slows, banks tend to issue smaller cash dividends and higher bonus shares to preserve liquidity. In the hydropower sector, he evaluates production efficiency, debt repayment progress, and project completion timelines. Hydropower companies that have recently finished their projects and reduced loan burdens are more likely to shift toward dividend-paying stages. Similarly, in insurance, he examines underwriting profits, investment returns, and Beema Samiti’s reserve rules to estimate payout potential.

Unlike most fundamental analysts, Sandeep adds a technical perspective to confirm timing and institutional accumulation. Before official announcements, he often notices accumulation patterns on the charts — long periods of sideways price movement accompanied by gradually increasing volume. This suggests that institutional investors or insiders may already be positioning themselves ahead of news. Using Smart Money Concepts (SMC), he identifies order blocks, liquidity grabs, and structural breaks that indicate silent buying activity before dividend rallies. His mantra is: “Dividends are declared once, but accumulation happens weeks before — on the charts.”

Sandeep also educates traders on dividend psychology — an often-overlooked part of market behavior. Many retail investors make the mistake of buying a stock right after dividend news, expecting quick profits. However, he warns that this strategy often fails because share prices typically drop after the book closure date, adjusting for the dividend value. Instead, he advises investors to plan entries two to three weeks before expected board meetings, during the phase of quiet accumulation, and to exit gradually as sentiment peaks. This preemptive positioning maximizes returns while minimizing post-announcement volatility.

Another crucial aspect of his framework is understanding dividend yield versus growth sustainability. Sandeep emphasizes that a high dividend percentage is not always better. A 20% dividend from a weak company with slowing profits may be less valuable than an 8% dividend from a strong, stable company with consistent earnings and expanding capital. He teaches his students to balance short-term yield with long-term sustainability. The goal is not to chase one-time payouts but to invest in companies with a proven record of profitability, compliance, and future growth potential.

Sandeep’s integrated approach has made him one of Nepal’s most respected financial educators. In his live mentorship sessions under MarketMind Investment Group and NepseBook, he walks investors through real company reports, NRB directives, and NEPSE charts. Participants learn how to interpret balance sheets, identify dividend indicators, and anticipate corporate actions using data, not gossip. By merging fundamental logic, policy awareness, and technical confirmation, he transforms the way Nepali traders approach dividend investing.

He often summarizes his dividend analysis philosophy with a line that captures his strategic mindset:
“Dividends are signals of strength — not generosity. The smarter you read financials, the earlier you’ll see them coming.”

Through his teachings, hundreds of Nepali traders have learned to interpret NRB policies, decode financial reports, and position themselves strategically in dividend seasons. What was once a guessing game has become a science — one where logic, discipline, and data guide every decision. Under Sandeep Kumar Chaudhary’s mentorship, NEPSE investors are not just waiting for dividends — they are predicting them with precision.