AUTHOR: Mihir Dhruv Kapadia
Introduction
Mahindra & Mahindra Limited (M&M) is an Indian multinational automotive manufacturing corporation headquartered in Mumbai. It was established in 1945 as Mahindra & Muhammad and later renamed as Mahindra & Mahindra.
M&M is one of the largest vehicle manufacturers by production in India. Its subsidiary Mahindra Tractors is the largest manufacturer of tractors in the world by volume. It was ranked 17th on a list of top companies in India by Fortune India 500 in 2018. Its major competitors in the Indian market include Maruti Suzuki and Tata Motors.
It enjoys a leadership position in utility vehicles, information technology, financial services and vacation ownership in India and is the world’s largest tractor company, by volume. It also enjoys a strong presence in agribusiness, aerospace, commercial vehicles, components, defence, logistics, real estate, renewable energy, speedboats and steel, amongst other businesses. Headquartered in India, Mahindra employs over 2,40,000 people across 100 countries.
OBJECTIVE: To calculate Beta Value of Mahindra & Mahindra and find its significance.
VIEWS AND REVIEWS:
DATA COLLECTION: The data of NIFTY and Equity was collected through NSE Website and was downloaded from 1-March-2021 to 28-February-2022 in an excel sheet. The closing prices were found out. The data was filtered on weekly basis and then weekly returns of both NIFTY and Mahindra & Mahindra was calculated. The company returns have been regressed on nifty’s returns.
DATA ANALYSIS:
We know Y= a +bx1
Where b is the beta value.
H0 – Null Hypothesis
H1 – Alternate Hypothesis
If the beta coefficient is significant, the interpretation is that for every 1-unit increase in the predictor variable, the outcome variable will increase by the beta coefficient value.
Predicted Y = 0.001803+ 0.096034 X
N=46, R Square= 0.13353, F= 8.898041
Tstat(beta)= 3.62641
Tstat(0.05,45)= 2.3241
The above regression equation tells us the relationship between X and Y. Where X is NIFTY’s weekly returns and Y is Mahindra s weekly returns.
The positive sign of Beta tells us the that there is a positive relationship between NIFTY and Mahindra & Mahindra’s weekly returns.
From the equation, it can be seen that if X rises by 1 unit, Y will rise by 0.096034 units.
T calculated is more that T tabulated which means, β is statistically significant at 5% confidence level.
R^2 is 0.13353 which means 13% of Y (Mahindra & Mahindra) is explained by X. And the balance is explained by error.
F is 8.89 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 Equity. Also, it can be concluded that Mahindra & Mahindra is a low beta share. Since it is less than 1.