RESEARCH METHODOLOGY REPORT
Name- Himanshu Sharma
Subject– Research Methodology
Batch– Finance (F2)
Roll No. – 21230023639
- Title – Relationship between Nifty 50 and Havells India Ltd
- Author – Himanshu Sharma
Introduction – Havells India Ltd, founded in 1958, is a renowned electrical equipment company headquartered in Noida, India. Initially dealing in electrical cables, Havells expanded into a diverse portfolio, including lighting, fans, switchgear, and home appliances.
With a global presence spanning over 50 countries, Havells has established itself as a market leader in the electrical industry. In terms of financials:
- Revenue: Consistently showcasing robust revenue growth, reaching several billion dollars annually.
- Profitability: Reporting healthy profits, reflecting strong operational efficiency.
- Market Capitalization: Holding a significant market cap, reflecting investor confidence.
- Investments: Regularly investing in R&D and expansions, ensuring innovation and market relevance.
Their financial stability and commitment to innovation have contributed to Havells’ reputation as a trusted brand, catering to residential, commercial, and industrial segments with high-quality, energy-efficient solutions.
- Objective –
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The objective of beta is to find whether there is correlation between 2 Variable.
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2. To find out beta is more than 1 or less than 1.
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3. If beta is more than 1, It is good for short term investment. If beta is less than 1, we have to suggest it is good for long term investment.
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4. To find out regression equation.
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Significance:
Risk Management and Investment Decisions: Beta is a measure of a stock’s volatility in relation to the market. For investors a company like Havells India, understanding the beta can be crucial for managing risk. A beta greater than 1 indicates higher volatility compared to the market, influencing investment decisions and risk management strategies.
Financial Performance Assessment: Beta is often used to assess the financial performance and stability of a company. A low beta may suggest that the stock is less volatile and may be more resilient during market downturns, while a high beta could indicate a more volatile stock. This information is valuable for investors and analysts evaluating Havells India Ltd. financial health and stability.
Strategic Planning and Capital Structure: Havells India Ltd, being a diversified company, may have interests in various industries. Beta is a factor in determining the cost of equity, which is crucial for strategic planning and decision-making. Companies often use beta to assess the optimal capital structure, helping them strike a balance between debt and equity to minimize the cost of capital.
Industry and Market Dynamics: Beta can provide insights into how Havells India stock reacts to market trends and industry-specific factors. A beta analysis helps in understanding the company’s sensitivity to broader economic conditions and industry changes. This information can be valuable for strategic planning, especially in industries where external factors heavily influence business operations.
Investors Views :
– Anil Kumar Goel: He is a veteran value investor who holds 1.03% stake in Havells India as of September 2021. He focuses on buying quality stocks at reasonable prices and holding them for long term.
– Ashish Kacholia: He is a renowned stock picker who owns 1.01% stake in Havells India as of September 2021. He looks for companies with strong growth potential, high return on equity, and low debt.
– Rakesh Jhunjhunwala: He is one of the most famous and successful investors in India who holds 0.74% stake in Havells India as of September 2021. He follows a contrarian approach and invests in undervalued stocks with good fundamentals and management.
– Motilal Oswal Asset Management Company: It is a leading mutual fund house that owns 2.19% stake in Havells India as of September 2021. It follows a QGLP (Quality, Growth, Longevity, Price) framework to select stocks that have consistent and sustainable earnings growth.
Source:
(1) Investor Relations – Havells India. https://www.havells.com/en/investor-relations.html.
(2) Havells India – Funding, Financials, Valuation & Investors – Crunchbase. https://www.crunchbase.com/organization/havells-india/company_financials.
(3) HAVELLS INDIA LIMITED. https://www.havells.com/HavellsProductImages/HavellsIndia/pdf/About-Havells/Investor-Relations/Events/Havells_India_Limited_November_2020.pdf.
(4) HAVELLS INDIA LIMITED. https://www.havells.com/HavellsProductImages/HavellsIndia/pdf/About-Havells/Investor-Relations/Events/Havells_India_Limited_Aug_2018.pdf.
(5) Havells: Punching Above Its Weight And Winning – Forbes India. https://www.forbesindia.com/article/take-one-big-story-of-the-day/havells-punching-above-its-weight-and-winning/64985/1.
(6) en.wikipedia.org. https://en.wikipedia.org/wiki/Havells.
- Data Collection –
There are two parts in the data collection:
- Collecting the historical data of Nifty50 from the website of www.nseindia.com from 01/10/2022 to 30/09/2023. After collection of the entire data of the given time period only the data of Fridays are taken by shorting the whole data. According to the closing data of Nifty 50 of the time period, return values are collected using the formula of Return.
Weekly Returns = Closing price of end of the week – Closing price of beginning of the week/Closing price beginning of the week100
- Collecting the historical data of equity (Havells India Limited) from the website of www.nseindia.com from 01/10/2022 to 30/09/2023. After collection of the entire data of the given time period only the data of Fridays are taken by shorting the whole data. According to the closing data of Nifty 50 of the time period, return values are collected using the formula of Return.
Weekly Returns = Closing price of end of the week – Closing price of beginning of the week/Closing price beginning of the week100
- Data Analysis – Regression equation y on x (y = a+bx)
The regression equation is y=(-)0.30063+0.983878x
Interpretation:
y is the Dependent variable.
x is the independent variable.
a is Interpret.
b is Coefficient of beta or Slope.
-0.30063 is the y-intercept, which represents the value of Y when x is equal to zero.
0.983878 is the slope of the regression line, indicating the change in Y for a 1 unit change in x.
So, for each unit increase in x, y is expected to increase by 0.0983878. The y intercept of (-)0.30063 suggests that when x is zero, Y is expected to be (-)0.30063 .
This equation is a simple linear regression equation y = (-)0.30063+0.983878x, and it represents straight line relationship between y and x based on the given coefficients. If you have specific values of x, you can plug them into the equation to calculate the corresponding y values.
- Conclusion – In the equation, the coefficient of beta 0.983878
, represents the slope of regression line b. In this case, b is the estimated change in y for a 1 unit change in x. Since b = 0.983878, it is less than 1. Therefore, if beta is less than 1, then it is good for long term investment.
References:
https://www.nseindia.com/reports-indices-historical-index-data
https://www.nseindia.com/get-quotes/equity?symbol=HAVELLS