Author: Shreeya Khatavkar
Introduction of Company:
Started as a partnership firm in 1974 to manufacture plastic moulded luggage at Bombay Safari Industries (India) [SIIL] became a private limited company in 1980 and a public limited company in Feb.’86. It was promoted by Sumatichandra H Mehta.
The company manufactures injection moulded plastic articles and vacuum formed plastic articles at its plants at Bombay and Halol Gujarat. The unit at Mumbai is mainly an assembly shop manufacturing plastic moulded luggage from bought out components. Fully integrated plant at Halol for the manufacture of plastic moulded luggage was set up in 1982 with an installed capacity of 840 tpa. The capacity of this plant was increased to 1500 tpa in 1985.
The company came out with a public issue in Mar.’86 to part-finance the expansion project. The company expanded its capacity at its Halol plant from 1 lac peices to 2 lac peices pa in 1993-94. The company is planning to develop Luggage Assembling and also Automation in Frame bending in the near future.
Objective: To calculate the beta of Safari Industries and find its significance.
View and Reviews:
• 10 year’s financial track record analysis by Moneyworks4me indicates that Safari Industries (India) Ltd is a below average quality company.
• The key valuation ratios of Safari Industries (India) Ltd’s currently when compared to its past seem to suggest it is in the Somewhat overvalued zone.
• The Price Trend analysis by MoneyWorks4Me indicates it is Semi Strong which suggest that the price of Safari Industries (India) Ltd is likely to Rise-somewhat in the short term. However, please check the rating on Quality and Valuation before investing.
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^= 9237.387452
+ 9.355533245X
Where X= Safari Industries.
In the data, n= 46; R^2= 0.874613965
; F-stat= 306.9163
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 Safari Industries also rises and vice versa.
From the equation, it can be seen if X rises by 1 unit, Y will also rise by 17.5091 units (t-stat ).
R^2 is 0.874613965 which means 87.4% of Y is explained by X and the balance is error.
F= 306.9163 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 87.4% of Safari Industries can be explained by Nifty 50 and the remaining is attributed to the fundamentals and the policies of Safari Industries.
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.