Relationship between NIFTY and Asian Paints Ltd
NAME: AYUSHI SUD
SAP ID: 80012100676
INTRODUCTION
Asian Paints Ltd is a global Indian paint manufacturer headquartered in Mumbai, Maharashtra. The company is in the business of producing, selling, and distributing paints, coatings, home décor items, and bath fittings, as well as offering related services. Asian Paints is the largest paints company in India and the third-largest in Asia. Asian Paints is present in all four segments of decorative paints, namely Interior Wall Finishes, Exterior Wall Finishes, Enamels, and Wood Finishes. Its product offering also includes waterproofing, wall coverings, and adhesives. Berger International’s holding company is Asian Paints. In the financial year 2019-20, the company made a profit of 2,654 crores on revenue of 17,194.1 crores. The company’s production operations are spread over 15 countries, including India, and it has a significant presence in the Indian subcontinent and the Middle East. Champaklal Choksey, Chimanlal Choksi, Suryakant Dani, and Arvind Vakil founded the company at a garage in Gaiwadi, Girgaon, Mumbai. They all come from Jain families, and the company was started in February 1942. A temporary prohibition on paint imports during World War II and the Quit India Movement of 1942 left only foreign enterprises and Shalimar Paints on the market. In 1952, Asian Paints entered the market and declared a yearly turnover of 23 crores, but only a 2% PBT margin. By 1967, it had established itself as the country’s biggest paint maker. The Securities Exchange Commission has invested in the company, which has 12 institutional owners and shareholders (SEC). Bridge Builder International Equity Fund and Touchstone Sands Capital Emerging Markets Growth Fund are the two largest investors.
OBJECTIVE
To calculate beta of the company and find its significance
DATA ANALYSIS
Predicted Y =0.0367378740997754 + 0.195459X
N=47, R Square = 0.188463, F = 10.21808
Tstat (beta) = 3.19653
Tstat (0.05,45) = 2.0141
The above regression equation tells us the relationship between X and Y. Where X is NIFTY’s weekly returns and Y is Asian Paints Ltd weekly returns.
The positive sign of Beta tells us the that there is a positive relationship between NIFTY and Asian Paints Ltd’s weekly returns.
From the equation, it can be seen that if X rises by 1 unit, Y will rise by 0.195459 units.
T calculated is more that T tabulated which means, β is statistically significant at 5% confidence level.
R^2 is 0.469523 which means 47% of Y (Asian Paints Ltd) is explained by X. And the balance is explained by error.
F is 38.944318 which is more than table value which means model is statistically significant at 5% level.
REVIEWS By Geojit Financial Services
Asian paints (APNT), is engaged in the business of manufacturing, selling and distribution of paints and related product to home décor. APNT is the market leader in the Indian paint manufacturing industry.
● Q3FY22 revenue grew by 26% YoY as strong double-digit volume (18% YoY) growth continued, supported by higher demand from T1/T2 cities.
● EBITDA margin declined by 825bps YoY to 18.1% due to inflationary pressure on input prices. However, sequentially, margins improved by 534bps YoY led by price hikes.
● PAT declined by 18% YoY on account of weak operating margins which was partially offset by lower tax outgo.
● The company has taken a price hike of 18% to 22% on a YTD basis to mitigate the pressure on input cost. The company expects the overall impact on margins to be visible in Q4.
● We expect the demand condition may slow down in the 1st half of Q4 due to state-level restrictions while the uptrend in the construction sector provides support.
● We maintain a Buy rating on the stock with a revised TP of Rs. 3663, based on a P/E of 60x on FY24E EPS.
CONCLUSION
β is statistically significant in case of NIFTY and Asian Paints Ltd. Also, it can be concluded that Reliance Industries ltd is a low beta share.Since it is less than 1.