Author – Payal Parihar
INTRODUCTION
Power Finance Corporation Ltd. (P. F. C.) is an Indian central public sector undertaking under the ownership of the Ministry of power, Government of India, Established in 1986, it is the financial backbone of Indian power sector. PFC’s net worth as of 30 June 2023 is INR 1,184 billion. PFC is the 8th highest profit making Central Public Sector Undertaking (CPSU) as per the Department of Public Enterprises Survey for FY 2017–18. PFC is India’s largest NBFC and India’s largest infrastructure finance PSU. The government has raised the status of PFC from ‘ Navratna’ to ‘Maharatna’ PSU on 12 October 2021.
Initially wholly owned by the Government of India, the company issued an initial public offering in January, 2007. The issue was oversubscribed by over 76 times, which is one of the largest for an IPO of any Indian PSU. PFC is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange(NSE).
Objective
To find beta and its significance.
Views and Reviews
Power Finance Corporation (PFC) is on a positive financial path, with consistent growth in total assets and reserves. Although the reduction in long-term borrowings is promising, the substantial increase in short-term borrowings raises questions and merits further investigation. The company’s dedication to shareholder rewards remains steady, evident in the sustained bonus equity share capital. However, fluctuations in contingent liabilities and substantial foreign exchange expenditure introduce potential risks. PFC’s ability to manage and address these challenges will be pivotal for its continued financial stability and adaptability in a changing economic environment.
Data Collection
The data for the analysis was collected from Historical data of Nifty 50 index and Power Finance Corporation limited from yahoo Finance further the data was classified into date from 1/10/22 to 30/9/2023 and there closing balance for the day till Friday and then calculated the returns of both nifty 50 index (X) and Power Finance Corporation (Y) in the table form in excel and then considering the returns of both we find regression.
Data Analysis
The regression equation is as follows-
Y= 2.084124111 + 1.236347117X
The above equation shows us the relationship between weekly returns of Nifty 50 and weekly returns of Power Finance Corporation Limited.
The Weekly returns of Nifty 50 is independent variable, and the weekly returns of Power Finance Corporation Limited is dependent variable. The positive sign shows that if weekly returns of Nifty 50 rises, weekly returns of Power Finance Corporation Limited also rises and vice versa.
It implies that if the weekly returns of Nifty 50 (X) increase by 1 unit, the weekly returns of Power Finance Corporation Limited (Y) is expected to increase by approximately 1.236347117 units.
The number of observations is 49 and R square is 0.097923889, which means 10% of weekly returns of Power Finance Corporation Limited depends upon weekly returns of Nifty 50. In other words, 90% is error which may be due to other variables which are not taken in the model.
F is 5.102033785 and P-value is 0.02 which means that the overall model is statistically significant at 1% level.
Conclusion
Since beta is more than 1, Power Finance Corporation Limited is good for short term investment.
Reference