BRM : Assignment 2

Title: Relation of Nifty50 with Adani Power Limited

Author: Ancy Noel, Roll No: 02

Introduction:

With four IG rated businesses, it is the only Infrastructure Investment Grade issuer in India. Adani Power Limited is the power business subsidiary of Indian conglomerate Adani Group with head office at Ahmedabad, Gujarat. The company is India’s largest private thermal power producer, with capacity of 12,410 MW. The Mercom capital ranks Adani Group as the #1 global solar power. Adani Power was ranked as the 73rd largest corporation in India in Fortune India 500 list of 2018.Adani Power is a private thermal power producer.

Objective: To calculate Beta (β) of Adani Power limited and find its significance.
Views and Reviews: 1. “The acquisition of 205 MW solor portfolio expands our footprint in states where we already have a presence, and with our strong operational expertise, we will deliver significant value for our shareholders,” said Vneet Jaain, MD and CEO of Ad Green Energy Ltd.
Adani Group is a diversified organization in India with combined revenue of $13 Bn and market cap of $22 Bn (as on 27th May 2020) comprising 6 publicly traded companies. It has created a world class transport and utility infrastructure portfolio that has a pan-India presence. Adani Group is headquartered in Ahmedabad, in the state of Gujarat, India. Over the years, Adani Group has positioned itself to be the market leader in its transport logistics and energy utility portfolio businesses focusing on large scale infrastructure development in India with O & M practices benchmarked to global standards. With four IG rated businesses, it is the only Infrastructure Investment Grade issuer in India. Adani Power Limited is the power business subsidiary of Indian conglomerate Adani Group with head office at Ahmedabad, Gujarat. The company is India’s largest private thermal power producer, with capacity of 12,410 MW. The Mercom capital ranks Adani Group as the #1 global solar power. Adani Power was ranked as the 73rd largest corporation in India in Fortune India 500 list of 2018.Adani Power is a private thermal power producer.
Objective: To calculate Beta (β) of Adani Power limited and find its significance.
Views and Reviews: 1. “The acquisition of 205 MW solor portfolio expands our footprint in states where we already have a presence, and with our strong operational expertise, we will deliver significant value for our shareholders,” said Vneet Jaain, MD and CEO of Ad Green Energy Ltd.
2. According to the agreement, Ad Airport Holdings Ltd(AAHL) will acquire the debt of GVK ADL from its airport lenders. “The GVK group and AAHL have agreed that AAHL will offer a stand-still to GVK, in addition, to release of the guarantee given By GVK Power and infrastructure Ltd with respect to the debt acquired by it,” said AAHL’s parent company Ad Enterprises in regulatory filings at stock exchanges.
Data Collection: The data for the Adani Power limited and the Nifty50 is downloaded from the NSE India site, dated from 1st January 2019 to 31st December 2019. The data downloaded is manipulated to consider only the Friday closing price, thus converting the data into weekly closing format. With the sorted data the returns are calculated with the help of formula ((week 2 – week1) /week1 *100) based on the Weekly closing format, Weekly returns were calculated as
Nifty50 Returns: X
Adani Power Limited Returns: Y

Data Analysis: On the bases of data collected and applying Regression on the variables calculated ie. X and Y following statistics are derived using the Regression option of Data Analysis using Ms Excel:

N (Number of observations) = 50
R square (R2) = 0.087
t-Stat = 2.151, N = 50 , R square (R2) = 0.087, SE = 7.364, p = 0.036, F = 4.62

The above equation shows the relationship between Adani Power limited Equity (Y) and Nifty50 Indices (X). If Adani Power Ltd weekly returns rises by 1 unit then Nifty50’s weekly returns will decrease by 1.43 units and vice versa. As per the above derived statistics t- stat value for b is 2.151. The p value which p = 0.036 less than 0.05 which means p is statistically significant at 5% level. R square is 0.087 which means 8.7% of Y (variance) is explained by X. F is 4.62 and the p value is less than 0.05 which means b is statistically significant. Overall, model is significant at 5% level

Conclusion: As per the Data Analysis, the overall model is significant, therefore we can depend 10% on
it.