Tittle: Relation of National Thermal Power Corporation with Nifty Fifty and to calculate Beta.
Author: Nupur Hinwar
Introduction:
NTPC is India’s largest power utility with an installed capacity of 73,824 MW (including JVs), plans to become a 130 GW company by 2032. Established in 1975, NTPC aims to be the world’s largest and best power major. NTPC has comprehensive Rehabilitation & Resettlement and CSR policies well integrated with its core business of setting up power projects and generating electricity. The company is committed to generating reliable power at competitive prices in a sustainable manner by optimising the use of multiple energy sources with innovative eco-friendly technologies thereby NTPC is contributing to the economic development of the nation and upliftment of the society.
Objectives:
To calculate Beta and see it’s significance.
Literature Review:
Gurdeep Singh, who is an alumnus of IIM Ahmedabad. He is the Chairman and Managing Director of NTPC Limited, a central Public Sector Undertaking (PSU) under the Ministry of Power, Government of India.He has been leading the company since 2016. NTPC is engaged in the generation of electricity and other activities. The headquarters of the PSU are situated in Delhi. It has a market capitalisation of Rs 2,24,000 crore as of September 1. The share price of the company was Rs 231.35 on Friday on NSE. Prior to joining NTPC, he was Managing Director of Gujarat State Electricity Company Limited. He has over three decades of experience in the power sector. He started his career in 1987 as an Engineer Trainee with NTPC. Singh has worked his way through various ranks in the public and private sectors including MNCs. Singh holds a bachelor’s degree in mechanical engineering from NIT Kurukshetra. He did the Management Education Program at IIM Ahmedabad.
The company was founded on 7 November 1975 by India’s former Prime Minister Indira Gandhi as National Thermal Power Corporation Private Limited. It started working on its first thermal power project in 1976 at Shaktinagar—named National Thermal Power Corporation Private Limited Singrauli—in Uttar Pradesh.[9] In the same year, its name was changed to “National Thermal Power Corporation Limited”. In 1983, NTPC began commercial operations and earned profits of INR 4.5 crores in FY 1982–83. By the end of 1985, it had achieved power generation capacity of 2000 MW. In 1986, it completed synchronisation of its first 500 MW unit at Singrauli. In 1988, it commissioned two 500 MW units, one each in Rihand and Ramagundam. In 1989, it started a consultancy division. In 1992, it acquired Feroze Gandhi Unchahar Thermal Power Station from Uttar Pradesh Rajya Vidyut Utpadan Nigam of Uttar Pradesh.[10] By the end of 1994, its installed capacity crossed 15,000 MW.
Data Collection:
Data for Nifty Equity National Thermal Power Corporation has been downloaded by site nseindia.com and finance.yahoo.com from 1st November 2022 to 31st October 2023 data has been calculate of Friday closing and weekly Nifty and Return(X).
Data Analysis:
NTPC share 0.362 + 0.453nifty
n=48, Rsquare = 0.225, F = 7.157
The above equation shows the relationship of NTPC with Nifty.
If Nifty rises by 1 unit, NTPC will rise by 0.453 units.
t-stat for b is -3.560 and the p value is 0.019 which is less than 0.05, so b is not equal to 0, meaning Nifty impacts NTPC.
Rsquare is 0.22, meaning 22% of NTPC share are explained by the movement in nifty and 90% depends upon other things like fundamentals.
F =7.15 and p value is less than 0.05, so the model is significant at level 5% level.
Conclusions:
As Beta (0.453) is less than 1, so good for long term investments.
References:
http://finance.yahoo.com/quote/NTPC.NS/profile?p=NTPC.NS
https://www.ntpc.co.in/ntpc-overview