TITLE: Relationship of NIFTY50 with INDIA CEMENTS LTD. And to calculate beta.
AUTHER: Ishrat Parveen Ansari
INTRODUCTION:
The year was 1946. The Second World War was over and political freedom was round the corner. It was then The India Cements Ltd. began its humble moorings in the form of a cement factory at Talaiyuthu, an almost unmapped tiny hamlet in Tirunelveli district, Tamil Nadu. As one of the oldest Indian corporates, established in 1946, the company set up its first plant in 1949 at Sankarnagar (Talaiyuthu).
The India Cements Limited is a cement manufacturing company based in Chennai. It is the 9th largest listed cement company in India by revenue. The company is headed by former International Cricket Council chairman and Board of Control for Cricket in India president N. Srinivasan.
OBJECTIVES: to calculate beta and to see it’s significance.
LITERATURE REVIEW:
The existing literature on Cement Industry focused on general profitability, liquidity and productivity in greater concentration. NagarajaRao (1980), Rosemary (1987), Nalini (1990), Cokan and Vaidhya (1993), Rajagopalan (2009), with a development of new model ‘Profitability Scoring Multiplier Model ,Dharmendra and Mistry (2011) studied profitability performance of Cement companies and of the view that input cost escalation in the form of power and fuel affected the profit performance of cement industry at the top level and debt heavy capital structure was the main source of unsatisfactory profitability performance at bottom level.
Nair (1991), Bhanu (1995), Acharya (1999), Muthukrishnan (2002), Muthukrishnan and Chidambaram (2002), Sathye (2005), Shah and Telser (2006), Rajmohan and Vijayaraghavan (2008),Khan and Darab (2010) in their Productivity studies in Cement industry concluded that after complete decontrol in 1989, the productivity of companies under study improved considerably on account of change of technology from wet to dry processing. But, the better internal performance was shadowed by general inflationary trend in power and fuel prices and transportation costs.
Rajeswari (2000), Luther (2007) studies on liquidity performance revealed that plants under public sector performed very poorly but, private sector owned plants fared well in managing the short term funds. Rajagopalan (2009) developed a new model ‘ Equivalent Cash Points Model’ to test the cash management efficiency by matching cash inflows and outflows and by taking India Cements Limited as a case and found that the results were mixed from poor performance to very good performancedepending on the parameters fixed to assess cash performance.In spite of studies of cement industry from various important angleshave been carried out, a specific analysis of cost of cement industry is long awaited. Hence the study takes the cost aspect with the following objectives to make a detailed analysis.
Abstract India is the world’s second largest producer of cement behind China with ever growing industry capacity of over 200 plus million tonnes (MT) and has left behind developed markets such as the US and Japan. With low per capita consumption of 28 kg in the 1980’s, it has risen to 110 kg in the 2000’s but still far behind world present average of 260 Kgs. It is a highly capital-intensive industry and operates with a high level of fixed cost. With huge investments planned in the Indian Infrastructure both by government and private sector, to various national infrastructure projects, road networks and housing facilities, growth in the cement consumption is anticipated in future years. For smooth running of cement industry it is important to have overall balanced projection. The current scenario of Cement industry in India is more concerned of solving the consumer complaints, resolve disputes with special attention given to public interface. For smooth survival and competitive growth it is paramount important for cement industry to evaluate the past performance and the expected future performance of companies along with the profitability position.
DATA COLLECTEION:
Data for Nifty and Equity has been downloaded from finance.yahoo.com for the period from 1st November 2022 to 31st October 2023. The data has been manipulate to calculate Friday closing prices for Nifty and and Equity. The closing price of NIFTY50 is termed as ‘X’, INDIA CEMENTS LTD. and is termed as ‘Y’. They both repressed.
DATA ANALYSIS:
India Cements Ltd’s share price = -0.394+1.933
n = 48
R Square = 0.224
F = 13.588
The above equation shows the relationship of India Cements Ltd with Nifty. If Nifty raises by 1 Units then Indian Cements Ltd will raise by 1.933 Units.
T-Stat for b is 3.686 and the P Value is 0.000588557 which is less than 0.05, So b ≠ 0
Meaning Nifty impacts India Cements Ltd Shares.
R Square is 0.22 that means 22% of India Cements Ltd is explained by Nifty, meaning 78% depends upon ther things and fundamentals.
F = 13.588 and P Value is is less than 0.05, so the model is statistically significant at 5% level.
CONCLUTION:
The Beta (1.933) is more than 1 then it is good for short term investment.
REFERENCES:
- Rajagopalan, N.V.R. and Vijayalakshmi, P, Cost Analyses of Cement Industry with Special Reference to India Cements Limited (ICL) (2013). International Journal of World Research, I(IX), pp. 12 – 20, 2013.
- Sayed Mohammad Tariq Zafar, A STUDY ON FUNDAMENTAL ANALYSIS OF INDIAN CEMENT INDUSTRY, International Journal of Business Swot (IJOBS) Vol. IV-No.1 Jan-March 2011 ISSN:0975-8836.
