Author: Mehul Rathi
Introduction of Company:
Maruti Suzuki India Limited (MSIL), a subsidiary of Suzuki Motor Corporation, Japan, is India’s largest passenger car maker. Maruti Suzuki is credited with having ushered in the automobile revolution in the country. The Company is engaged in the business of manufacturing and sale of passenger vehicles in India. Making a small beginning with the iconic Maruti 800 car, Maruti Suzuki today has a vast portfolio of 16 car models with over 150 variants. Maruti Suzuki’s product range extends from entry level small cars like Alto 800, Alto K10 to the luxury sedan Ciaz. Other activities include facilitation of pre-owned car sales fleet management, car financing. The Company has manufacturing facilities in Gurgaon and Manesar in Haryana and a state of the art R&D centre in Rohtak, Haryana.
The Company, formerly known as Maruti Udyog Limited, was incorporated as a joint venture between the Government of India and Suzuki Motor Corporation, Japan in February, 1981. Presently, Suzuki Motor Corporation owns equity of 56.2%. The Company’s shares are traded on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Objective: To calculate the beta of Maruti Suzuki India Limited and find its significance.
View and Reviews:
• Maruti Suzuki India Ltd hits new high, soars 8.53% on hopes of demand recovery- By Mint
• Maruti Suzuki India Ltd sales recovery prospects brighten with onset of festive season- By Business Standard,
• Maruti Suzuki India Ltd Slips 7.53%, S&P BSE Automobile index Shed 2.121%
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^= -0.0013 + 0.601875X
Where X= Maruti Suzuki India Ltd.
In the data, n= 48; R^2= 0.136749; F-stat= 7.2869
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 Maruti Suzuki India Limited also rises and vice versa.
From the equation, it can be seen if X rises by 1 unit, Y will also rise by 0.222 units (t-stat for b= 2.69).
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 0.136749 which means 13.67% of Y is explained by X and the balance is error.
F= 7.2869which 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 13.67% of Maruti Suzuki India 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 analyse the risk factors and the analysis can depend on this model.