Topic Name: Relationship of JK Tyre & Industries with Nifty 50.
Author: Janhavi Sandeep Khamkar (Roll No.: 222088)
Introduction: JK Tyre & Industries Ltd is a leading tire manufacturer in India and is also among the top 25 tire manufacturers in the world. The company was founded by Juggilal Singhania and Kamlapat Singhania in 1951 and is headquartered in New Delhi, India[2]. JK Tyre is a part of the JK Organization, a group of companies that includes businesses in industries such as paper, cement, and insurance. The company is a pioneer in steel radial technology in India and has expanded its business portfolio over the years. JK Tyre has 12 manufacturing facilities globally, 9 of which are in India and 3 in Mexico, and produces around 35 million tires annually. The company offers a range of tires for trucks, buses, and cars and has a strong network of over 4000 dealers and 500+ dedicated brand shops called Steel Wheels and Xpress Wheels. JK Tyre’s vision is “to be amongst the most trusted companies with a global tire brand”.
Objective: To calculate beta of JK Tyre & Industries and find out its significance.
Views & reviews:
Dr Raghupati Singhania (MD)- “I am sure that Kathuria will provide adept leadership and lead JK Tyre on a new growth trajectory.” The company is a leading supplier of radial technology in India as well as a leading tyre manufacturer with well-known brands – JK Tyre, Vikrant and Tornel among others. Currently, it has a presence in over 105 countries across six continents, having 12 globally benchmarked ‘sustainable manufacturing facilities (9 in India and 3 in Mexico) with a capacity of over 32 million tyres per annum.JK Tyre was also the first company to launch ‘Smart Tyre’ technology with Tyre Pressure Monitoring Systems (TPMS) which monitors the tyre’s vital statistics’ including pressure and temperature.
Anshuman Singhania (MD) – The financial year 2024 has started on a positive note. The Company’s top-line has been growing consistently and has recorded consolidated net revenues of Rs.3,729 crore in Q1FY24, higher by 2% as compared to the corresponding quarter, led by continued robust demand. The operating profit has grown from Rs.291 crore to Rs.465 crore over the corresponding quarter, which is an impressive increase of 60%. During the quarter, operating margin expanded by 450 basis points. This is a result of continuous focus on improving operational efficiencies, leveraging on product premiumization, digitalization and cost optimization, which are further aided by stable raw material prices.
Data Analysis:
Y^ = 0.0131 + 1.5620X
tstat = (2.4842)
N= 50
R2 = 0.1139
F = 6.1714
The above equation shows relationship between Nifty 50 (X) and JK Tyre & Industries Ltd (Y). The positive sign means there is a positive relationship, which means, if X rises, Y also rises and vice-versa. If Nifty 50 (X) rises by 1 unit, JK Tyre & Industries Ltd (Y) rises by 1.5620 units. N means there are 50 observations. The t-stat for b is 2.4842, which means b is statistically significant at 5% level. R2 = 0.1139 which means 11.39% of JK Tyre & Industries (Y) is explained by Nifty 50 (X), and the balance 88.61% is error due to the variables which are not in model.
Since F = 6.1714 is more than tabulated F value (F 0.05,1DF,48DF = 4.043), the overall model is statistically significant at 5% level.
Conclusion:
Since the beta of JK Tyre & Industries Ltd is 1.56, the shares of the company are good for a short-term investment