Author: Pranav Kalra
Introduction of Company:
Polycab India (NSE:POLYCAB) is engaged in the business of manufacturing and selling wires and cables and fast moving electrical goods ‘FMEG’ under the ‘POLYCAB’ brand. Apart from wires and cables, the company manufacture and sell FMEG products such as electric fans, LED lighting and luminaires, switches and switchgear, solar products and conduits & accessories.1
The company’s promoters collectively have more than four decades of experience among them. The company’s Company was incorporated as ‘Polycab Wires Private Limited’ on January 10, 1996 at Mumbai as a private limited company.
The company manufacture and sell a diverse range of wires and cables and its key products in the wires and cables segment are power cables, control cables, instrumentation cables, solar cables, building wires, flexible cables, flexible/single multi core cables, communication cables and others including welding cables, submersible flat and round cables, rubber cables, overhead conductors, railway signaling cables, specialty cables and green wires. In 2009, the company diversified into the engineering, procurement and construction ‘EPC’ business, which includes the design, engineering, supply, execution and commissioning of power distribution and rural electrification projects. In 2014, the company diversified into the FMEG segment and its key FMEG products are switches and switchgear and conduits & accessories.
Objective: To calculate the beta of Polycab India Ltd. and find its significance.
View and Reviews:
• Polycab India fell 4.43% to Rs 2563.30 after the company’s consolidated net profit rose 1.38% to Rs 248.40 crore on 22.78% increase in net sales to Rs 3,371.99 crore in Q3 December 2021 over Q3 December 2020.- By Business Standard,
• Polycab India fell 4.43% to Rs 2563.30 after the company’s consolidated net profit rose 1.38% to Rs 248.40 crore on 22.78% increase in net sales to Rs 3,371.99 crore in Q3 December 2021 over Q3 December 2020. – By Mint
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^= 0.010181623 + 1.237140991X
Where X= Voltas Ltd.
In the data, n= 47; R^2= 0.230434799; F-stat= 13.175142
The above regression equation tells us the relationship between X and Y, where Y= Polycab India Ltd. 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 Polycab India Ltd. also rises and vice versa.
From the equation, it can be seen if X rises by 1 unit, Y will also rise by 1.237140991 units (t-stat for b= 3.629757902).
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 0.230434799 which means 23.04% of Y is explained by X and the balance is error.
F= 13.175142 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 23.04% of Polycab India Ltd. can be explained by Nifty 50 and the remaining is attributed to the fundamentals and the policies of Polycab India Ltd.
Since F value is greater than the table value, b value is significant. The model can be relied upon to analyse the risk factors and the analysis can depend on this model.