AUTHOR: GAYATRI SHINDE ( FINANCE- 1)
21230023213
GAIL (India) Limited (formerly known as Gas Authority of India Ltd.) is a central public sector undertaking under the ownership of the Ministry of Petroleum and Natural Gas, Government of India. It has the following business segments: natural gas, liquified natural gas, liquid hydrocarbon, liquefied petroleum gas transmission, petrochemicals, city gas distribution, renewable energy including solar & wind, exploration and production, GAILTEL and electricity generation. GAIL was given the Maharatna status on the 1 February 2013 by the Indian Government, a status which 11 other Public Sector Undertakings (PSUs) have.
GAIL owns and operates a network of around 13,722 km of natural gas pipeline and currently executing around 6,000 km of pipeline projects of its own and about 2,000 km through two JVs, as part of the National Gas Grid. PNGRB has authorized the PSU to create a 1,755 km long Mumbai-Nagpur-Jharsuguda Pipeline.
GAIL, in 2023, completed the world’s first ship-to-ship LNG transfer
OBJECTIVE OF THE REPORT –
To Calculate Beta and its significance of the equity stock of GAIL LTD
REVIEWS:
Since its inception, GAIL has played a pivotal role in development of Indian energy sector. Within a very short span of time, we have established ourselves as a Global Maharatna with significant presence in the entire gas value chain. Our fast progression has made us face resultant business complexities, associated confrontation of global scale competition in all major business verticals.
Mission: “Enhancing quality of life through clean energy and beyond”.
Vision: “Be the leader in natural gas value-chain and beyond, with global presence, creating value for stakeholders with environmental responsibility”
PROCEDURE FOR DATA COLLECTION
First I logged on to nse official website www.NSEindia.com. Then I clicked on historical data via (https://www.nseindia.com/Indices/IndexArchiveData.html). Then I selected the period from 01st Nov 2022 to 31st Oct 2023 then clicked apply and downloaded the CSV file of the price of the BSE index.
Similar procedure is followed for obtaining the data of data of GAIL LTD for the period 01st Nov 2022 to 31st Oct 2023.
After downloading the CSV Files of both the BSE index and GAIL Limited share price I proceeded to calculate beta of the stock of GAIL Limited.
PROCEDURE FOR DATA ANALYSIS
For calculating the weekly returns of the stock and the nse index, I selected the closing price of every last day of the trading week i.e. Friday
For arriving at the last day of the week I applied the formula =Weekday(cell value,2) then it returns the days signifying: 1 for Monday 2 for Tuesday likewise 6 for Friday , I kept only the no 6 denoting Friday and deleted the rest useless data for the purpose.
On performing the above mentioned procedure, we are left with three columns first being date column 2nd being closing prices of the stock and 3rd being closing price of the BSE index.
Now we will calculate the corresponding return for each week from the stocks by applying the formula = {(Closing value – Opening Value)/ Opening Value*100}.
Formula used ,
for calculation of Beta = COVARIANCE ( RETURN ON STOCK,RETURN ON MARKET INDEX)/VARIANCE OF MARKET
Beta= COV(Ri, Rm)
VAR (Market)
={Ri – Mean of Ri}{Rm- Mean of Rm}/No of items
{(Rm- mean of Rm )^2}/No of items
Hence on making the above calculations we get the beta for the company =. which is less than 1, that indicates that the company is less volatile in nature hence it is suitable for long term investments.
By applying the anova on the above data obtained we obtained the correlation between the stock and market return .1606 which indicates there is positive relation between the movement of price of stock and market movements. Similarly we obtained the F value and P value to be 1.4842 and .22609 respectively.
Equation: Y=.676825+0.36378x
Interpretation:
The above equation shows the relation between NSE SENSEX and GAIL ltd .
The regression equation is in the form of Y = mx + b, where:
- Y represents the dependent variable.
- X represents the independent variable.
Interpreting the coefficients:
- The coefficient is 0.67682 is the intercept of regression line.
- The coefficient 0.36378 is the slope of the regression line. It indicates the change in Y for a one-unit change in X. In this case, for every unit increase in X, Y is expected to increase by 0.36378 units.
- Number of observations are 49.
- 1.11619 is the t-stat for Y, the p-value for which is .27001.
- R square is 0.025823819. This value indicates that approximately 2.58% of the variability in the dependent variable can be explained by the independent variables in the model.
- The ANOVA table shows the analysis of variance. The regression has a significant F .27001. This implies that the overall regression model is statistically insignificant in explaining the variability in the dependent variable.
Conclusion: Beta is 0.36378 which is less than 1, it means that GAIL ltd is good for long term investment.