Author: Rupayan Ghosh
Introduction: RailTel is a Central Public Sector Enterprise in the telecom industry. It is an ICT provider and one of the largest neutral telecom infrastructure providers in the country owning a Pan-India optic fiber network.
RailTel was incorporated on September 26, 2000 with the aim of modernizing the existing telecom system for train control, operation, and safety and to generate additional revenues by creating nationwide broadband and multimedia network, laying optical fiber cable using the right of way along railway tracks.
Objective: To calculate beta and find its significance
Views and review: RailTel had announced its Consolidated Operating Income of Rs 704 Crore in the fourth quarter of FY 22-23 with a growth of 55 per cent quarter on quarter in its 139th Board Meeting.
The Company has posted annual growth of 27 per cent in revenue, with Total Consolidated Operating Revenue at Rs. 1964 Crores as against Previous Year corresponding figure of Rs.1548 crores. The Company has achieved an EBITDA margin of 20 per cent in Q4 in comparison to Q3 of 17 per cent.
As per the company’s official statement, The Profit Before Tax (PBT) in the fourth quarter of FY 22-23 before Exceptional Items is Rs. 67 Crores as against the Previous Quarter’s corresponding profit of Rs. 43 crores, registering an increase of 56 per cent quarter on quarter (QoQ).
Data collection: Data was collected from the NSE India website as shown in the references. The period was set from 1/12/22 to 30/11/23.
Analysis:
Equation y= -0.2156-0.2539x
The above equation shows the relation between RailTel and Nifty.
Return of RailTel is dependent on the return of Nifty, that means return of Nifty is independent variable.
Negative sign implies that if Nifty rises by 1 unit, then share price of RailTel will rise by 0.03 and vice versa.
Number of observations are 49.
The t-stat for y is -1.23, the p-value for y is 0.22.
R square is 0.03 which means 3% of variances in RailTel are explained by Nifty.
F is 1.53, p-value for this is 0.22 which means model is statistically insignificant.
Conclusion: Beta is -0.2156 which is less than 1, which means RailTel is good for long term investment.
References:
https://www.nseindia.com/get-quotes/derivatives?symbol=NIFTY
https://www.nseindia.com/get-quotes/equity?symbol=RAILTEL
https://www.railtelindia.com/profile/about-us.html
https://www.business-standard.com/companies/results/railtel-posts-highest-ever-operating-income-of-rs-1-964-cr-in-fy-2022-23-123051701316_1.html