TITLE- RELATIONSHIP OF NIFTY AND JSW STEEL
AUTHOR- JUVERIA KHATRI
INTRODUCTION- JSW Steel Ltd is an Indian multinational steel making company based in the city of Mumbai, India, a subsidiary of JSW Group.
After the merger of ISPAT steel, JSW Steel has become India’s second largest private sector steel company. The current installed capacity of the company stands at 18 MTPA. A $13 billion conglomerate, with presence across India, USA, South America & Africa, the JSW Group is a part of the O.P. Jindal Group with strong footprints across core economic sectors, namely, Steel, Energy, Infrastructure, Cement, Ventures and Sports.
OBJECTIVE- To calculate the β of company and find it’s significance.
DATA VIEWS AND REVIEWS-
1) ACCORDING TO BUSINESS STANDARD DATED ON 16TH MARCH 2022-
JSW Steel winds up three subsidiaries in Mauritius- JSW Steel announced that as a part of the Company’s overall efforts of simplifying the group structure, the three overseas subsidiaries of the Company domiciled in the Republic of Mauritius, named below, which were acquired in the earlier years have undergone winding up and have been liquidated w.e.f 15 March 2022:
A) Arima Holdings B) Erebus C) Lakeland Securities
2) ACCORDING TO MONEY CONTROL DATED 8TH MARCH 2022,
JSW Steel output jumps 21% to 1.58 MT in February- JSW Steel, registered a 21 per cent year-on-year (y-o-y) jump in its crude steel production to 1.58 million tonnes (MT) for February. In a statement, the JSW Group company said its output had stood at 1.31 MT in February 2021. JSW Steel’s production of flat-rolled products rose 25 per cent to 1.15 MT in February 2022, compared with 0.93 MT in the year-ago period. Its output of long-rolled products stood at 0.37 MT, an eight per cent rise compared with 0.34 MT a year ago.
3) ACCORDING TO MONEY CONTROL DATED 16TH FEBRUARY 2022,
JSW Steel’s JV company to sell Raipur steel plant to subsidiary for Rs 450 crore– JSW Ispat Special Products Limited, a joint venture between JSW Steel and private equity firm AION, said on February 16 its board has approved a proposal to sell its Raipur steel plant and certain other assets to a wholly-owned subsidiary via a slump sale of Rs 450 crore.
4) ACCORDING TO PUBLIC WALL LIST DATED 16TH FEBRUARY 2022-
Here’s why I think JSW Steel (NSE;JSWSTEEL) Is an interesting stock- The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. As a tree reaches steadily for the sky, JSW Steel’s EPS has grown 34% each year, compound, over three years. If the company can sustain that sort of growth, we’d expect shareholders to come away winners.
DATA COLLECTION-
Data of equity (historical price) and index were collected from https://www.nseindia.com/get-quotes/equity?symbol=JSWSTEEL. and https://www1.nseindia.com/products/content/equities/indices/historical_index_data.htm respectively. Daily returns from 1st March-2021 to 28 Feb-2022 were downloaded in excel format from these websites and it was sorted into weekly format. Then weekly returns were calculated for both index and equity and then regression analysis was done.
DATA ANALYSIS-
Predicted Y = Y(Cap)= 0.7051648+1.2061605x
N=46, R Square= 0.132396, F= 6.867012
Tstat (beta) = 0.7262278 Tstat (0.05,44)= 1.680
The above regression equation tells us the relationship between X and Y. Where X is NIFTY’s weekly returns and Y is JSW Steel’s weekly returns.
The positive sign of Beta tells us the that there is a positive relationship between NIFTY and JSW Steel’s weekly returns.
From the equation, it can be seen that if X rises by 1 unit, Y will rise by 1.9113253 units.
T calculated is more that T tabulated which means, β is statistically significant at 5% confidence level.
R^2 is 0.132396 which means 13.2396% of Y (JSW steel) is explained by X. And the balance is explained by error.
F is 6.867012 which is more than table value which means model is statistically significant at 5% level.
CONCLUSION
β is statistically significant in case of NIFTY and JSW Steel. Also, it can be concluded that JSW Steel is a low beta share. Since it is less than 1.