Author: Shruti Sakharkar (MMS FY, Roll no. 0222112)
Introduction:
SpiceJet is India’s most preferred low-cost airline, connecting the remotest corners of the country. They operate the maximum number of UDAN flights in India, addressing vision to make flying affordable and approachable for Indians. In fact, they have single handedly changed the air travel industry in India and there is no stopping at that. They are constantly adding new destinations, expanding their fleet, and enhancing services to reach out to millions of flyers in India and across the world.
They operate about 250 daily flights to 48 destinations within India and to international destinations. Their fleet is an apt mix of large, medium and small metal birds that includes Boeing 737 Max, Boeing 700 and Q400s. Their next generation aircraft deliver enhanced fuel efficiency, reduced emissions, and also offers increased passenger comfort.
Their pursuit of making flying affordable and comfortable for Indians has only deepened over the years with clear intentions in their actions.
Objective: To calculate Beta of SpiceJet & its significance
Views and Reviews:
“Ten successive profitable quarters, a record aircraft order, and the exploration of new growth avenues through the UDAN programme demonstrate the unwavering commitment of SpiceJet towards its long-term growth strategy. I’m pleased to witness our efforts translating into such positive outcomes.” – Ajay Singh, CMD of SpiceJet (2023)
“Travel enthusiasts are captivated by SpiceJet’s strategic expansion, leaving a lasting impression. The airline’s meticulously designed affordable options and extensive route network stand as a testament to their intelligent planning, catering to diverse passenger needs. This approach showcases SpiceJet’s dedication to enhancing customer experience and accessibility within the aviation industry.” – Maya Sharma, Travel Magazine (2022)
Data Collection:
We collected weekly closing prices from Nifty.com from 01-07-2022 to 24-04-2023. Then, we calculated the weekly returns for both Nifty 50 (X) and SpiceJet equity (Y) using the Friday closing prices. This helped us understand how both Nifty 50 and SpiceJet performed each week during this time.
Data analysis:
We can write the equation in the form of Y = a + bx
Y ̂= -0.0074 + 1.186x
(1.986)
N=41
R2 = 0.091
F = 8.9451
Interpretation: The above Equation shows the relationship between the Nifty 50 (X) with spiceJet Limited (Y). The positive sign means the positive relation meaning that if nifty stock rises, then Spice jet stock also rises and vice versa. If nifty 50 rises by 1 unit spice jet stock rises by 1.18 units. N means there are 41 observations. T is 1.986, is less than tabulated T (t.05,48 2.0106). T stat for b is statically not significant. R2 is 0.091 which means 9.1% of Y is explained by X. F is 3.945 which is less than the table value ( F.05, 1, 48 4.0420). So, overall, the model is not statistically significant @5% level of significance.
Conclusion
B is greater than 1 so spiceJet share is good short term.