Title: Relationship between Nifty 50 and Piramal Enterprise
Author: Prathmesh Kanojiya
Introduction: Piramal Enterprises Limited is the flagship company of Piramal Group, and active in financial services. Piramal Enterprises is involved in retail lending, housing finance and vehicle financing. It has two main subsidiaries viz., Piramal Capital & Housing Finance (PCHFL) and PHL Fininvest. It also holds minority stakes in Shriram Group companies.
In 2021, Piramal acquired the bankrupt Dewan Housing Finance Corporation and merged it with PCHFL. PCHFL’s retail finance division provides microlending and buy now, pay later services on behalf of partner fintech companies like ZestMoney, MoneyView, EarlySalary, Navi Group and KreditBee, and is also engaged in vehicle financing for partner companies like CARS24, CarDekho and Spinny. Apart from retail finance, it is also involved in corporate lending and real estate finance. Since 2016, Piramal Enterprises and Bain Capital Credit have been operating a partnership called India Resurgence Fund (IndiaRF), an investment fund for financially distressed Indian companies. Piramal Capital Fund (PCF), a partnership between Piramal Enterprises and CDPQ that was started in 2020, provides corporate financing services. Both IndiaRF and PCF are managed by Piramal Alternatives, an asset management company set up by Piramal Enterprises in 2021.
Views and Review: (1)Deepak Satwalekar, a former managing director of HDFC Standard Life, says Piramal gives the impression of being laid-back, but like all great investors, he doesn’t let on. Piramal started out in his family’s textile business in 1977, but went on to build a pharma. He has a rigorous work schedule, arriving at the office by 8:30 AM and working 12 hours a day.
(2) Mr. Ajay Piramal Chairman, Piramal Group says, built on the foundation of Trusteeship, Piramal Group imbibes a business ethos that believes in creating value for all its stakeholders.
Data Collection: The historical data of Nifty 50 and Piramal Enterprises from 1/11/2022 to 31/10/2023 has been downloaded from the NSE website.After collection of the entire data of the given time period only the data of Friday closing prices have been calculated. According to the closing data of the time period, return values are collected using the formula of return.
Data Analysis: Return on Piramal Enterprise =-241.366+0.005*Return on Nifty50
N=50 ; R2= 0.736 ; F= 134.390 ; P value = 0.00
The above equation shows us the relationship between Nifty 50 and Piramal Enterprise.Piramal enterprise is dependent variable and Nifty 50 is independent variable.The negative intercept implies that when the Return on Nifty50 is zero, the predicted Return on Piramal Enterprise is -241.366.The regression model is statistically significant, and approximately 73.68% of the variability in the Return on Piramal Enterprise can be explained by the Return on Nifty50. The positive coefficient for Return on Nifty50 suggests a positive relationship, indicating that as the Return on Nifty50 increases, the Return on Piramal Enterprise is expected to increase. The intercept provides a baseline value, but its practical interpretation might be limited in this context. Overall, the model seems to capture a meaningful relationship between the two variables.
Conclusion: Beta is -241.366 which is less than 1, which mean Piramal Industries is better for long term investment.
