Author: Vidhi Pabuwal
Introduction of Company:
Voltas Limited is a six-decade old company founded in 1954 and is part of the Tata Group. It has market share of over 24%. It has expertise in Air Conditioning & Cooling technology and offer variety of products like Air Coolers, Water Dispensers, Water Coolers and Commercial Refrigeration and various services to cater to the different areas of the industry. The head office of the company is located in Mumbai, Maharashtra with regional offices in various other cities. It has presence in various countries like India, Middle East, South East Asia and Africa.
The company is broadly structured into projects and products business. The projects business is classified into Domestic Projects Group (DPG) and International Operations Business Group (IOBG). While the products business is classified into Unitary Products Business Group (UPBG), Mining & Construction Equipment Division (MCED) and Textile Machinery Division (TMD).
Voltas has completed many international projects till date including air conditioning in the world’s tallest building, the Burj Khalifa,[3][4] in the once largest ocean liner, RMS Queen Mary 2 , Palace of Sultanate of Oman , Bahrain City Centre Mall , Ferrari World Theme Park in Abu Dhabi, Sidra Medical and Research Centre in Qatar, Villaggio Mall in Qatar and Dubai’s Mall of Emirates.
Objective: To calculate the beta of Voltas Limited and find its significance.
View and Reviews:
• Voltas hits new high, soars 7% on hopes of demand recovery- By Business Standard,
• Voltas’s sales recovery prospects brighten with onset of festive season- By Mint
• Voltas Ltd Slips 5.81%, S&P BSE Consumer Durables index Shed 1.33%
Data Collection:
• The data of the company and Nifty 50 (index) has been downloaded from nseindia.com.
• The Friday returns were then calculated as per the weekday.
• The data of the company was then regressed with Nifty 50 by using data analysis technique.
• The company data is dependent variable (X) whereas the Nifty 50 data is independent variable (Y).
Data Analysis:
Y^= 0.00225 + 1.2041X
Where X= Voltas Ltd.
In the data, n= 47; R^2= 0.27579; F-stat= 16.7558
The above regression equation tells us the relationship between X and Y, where Y= Voltas Limited and X= Nifty 50 prices.
The positive sign tells us there is direct relationship between them, if the price rises of Nifty 50 then the price of Voltas Limited also rises and vice versa.
From the equation, it can be seen if X rises by 1 unit, Y will also rise by 1.2041 units (t-stat for b= 4.09339).
The figure in bracket is t-stat for b, which is more than the table value (2.571), which implies that b is statistically significant at 5% level.
R^2 is 0.27579 which means 27.5% of Y is explained by X and the balance is error.
F= 16.7558 which is more than the table value, which means overall the model is statistically significant at 5% level.
Conclusion:
Based on the research methodology and data analysis performed we can conclude that only 27.5% of Voltas Limited can be explained by Nifty 50 and the remaining is attributed to the fundamentals and the policies of Voltas Limited.
Since F value is greater than the table value, b value is significant. The model can be relied upon to analyze the risk factors and the analysis can depend on this model.