Author–
Emil G Illickal
Batch: F1
Roll No:21230023102
Introduction-
About Eicher Motors Limited–
Eicher Motors Limited is an Indian multinational automotive company that manufactures motorcycles and commercial vehicles headquartered in New Delhi. Eicher is the parent company of Royal Enfield, a manufacturer of middleweight motorcycles.
Vision of Eicher Motors Limited –
To be recognized as the industry leader driving modernization in commercial transportation in India and the developing world.
Products-
Their various products are-
Commercial Vehicles
- Eicher Trucks and Buses
- Volvo Trucks India
- Eicher Engineering Components
- VE Powertrain
Motorcycles
Royal Enfield Motors
Objective of the report-
To calculate beta and find its significance.
Views and Reviews–
- “I think that it is a great opportunity, usual disclosure we and our clients are invested, and I think that around these levels also Eicher Motors is a decent proposition. It is not going to be like a multi-bagger it has been in the past, but I expect it to outperform the index at least in the near future, in medium term as well and there is a lot of fear around the two launches which have been taking place from Hero MotoCorp and Bajaj Auto,” says Dipan Mehta, Director, Elixir Equities.
- Saurabh Jain, assistant vice-president (fundamental research) at SMC Global Securities, says the market loves a company that always surprises. “Eicher Motors has been surprising the market with its performance for many quarters now. It will remain an investor’s fantasy, due to its brand premium, revenue, and margin growth”.
Data Collection–
- In order to analyse the relationship between Eicher motors limited and Nifty 50’s performance, data on their weekly closing prices was collected from the NSE India website for the period between November 11th, 2022, and October 31st, 2023
- Their Friday closing price is calculated.
- Subsequently, returns were calculated for both Eicher motors Limited and Nifty 50 by expressing the change in their weekly closing prices as a percentage of the previous week’s value.
- Finally, a regression analysis was conducted to investigate how the returns of Eicher motors limited (dependent variable, y) are influenced by the returns of Nifty 50 (independent variable, x).
- This approach allows us to quantify the extent to which Eicher motors limited performance is linked to the broader market movement represented by Nifty 50 and also to take decision whether to invest in long term or not.
Data Analysis-
The mathematical relationship between Eicher motors limited (Y) and Nifty 50’s returns (X) is expressed as:
Return of Eicher motors limited = -0.111402705 + 0.99850482 * (Return on Nifty 50)
(t stat = 33.64416)
Number of Observations (N): 49
R-Square: 0.960133332
F-Statistic: 1131.93
P-Value: 1.54E-34
Interpretation-
- The above equation shows the relationship between return of nifty 50 index and return of Eicher motors limited.
- Return of Eicher motors limited being the dependent variable and Return of Nifty 50 index being the independent variable.
- Positive sign means if nifty 50 index rises, Eicher motors limited share also rises.
- If Nifty 50 rises by 1 unit or 1 rupee, Eicher motors limited share will rise by approx..0.99285 units and vice-versa.
- Number of observations are 49.
- T-stat for beta (coefficient of return on nifty 50) is 33.64416. The P value for this is 1.54E-34 which means return of Nifty 50 is statistically significant for return of Eicher motors limited at 5 % level.
- R square is 0.960133332 which means approx. 96% of variance in return of Eicher motors limited share is explained by return of Nifty 50 meaning 4% is the error due to the variables which are not in the model.
- F is 1131.93 & P value for this is 1.54E-34 which means overall the model is statistically significant at 5% level.
Conclusion-
As beta is less than 1, 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=EICHERMOT