Author: Akshat Mishra
Introduction:
Ambuja Cements, a name synonymous with strength and progress in the Indian construction landscape, has etched its path from a regional pioneer to a national powerhouse. Founded in 1966 as Gujarat Ambuja Cement Limited, the company embarked on a journey of relentless innovation and strategic partnerships, culminating in its acquisition by the Adani Group in 2022. This pivotal move propelled Ambuja to new heights, injecting fresh dynamism and propelling it towards a vibrant future.
Objective:
To Calculate Beta(β) and its Significance.
Views/Reviews:
Gautam Adani is seeking to sell a stake in Ambuja Cements for about $450 million, the Financial Times reported on Friday, citing people familiar with the matter.
Morgan Stanley remains underweight on both Acc and Ambuja Cements
Data Collection:
Firstly, I visited the NSE website.
Then, I clicked on the Historical Data option under the Data and Reports section.
I downloaded the data of Ambuja Cements and Nifty 50 index from 01-October-2022 to 30-September-2023 in excel format.
In the end, I sorted the data in excel for analysis.
Data Analysis:
The regression equation has the form:
Y = a + b*X
Where, Y is the dependent variable, X is the independent variable, a is the intercept, and b is the slope.
In our case, Ambuja Cements is the dependent variable and Nifty 50 is the independent variable.
Intercept, a = -0.7780
Slope, b = 2.1028
So, the regression equation is given by-
Y (Ambuja Cement) = -0.7780 + 2.1028 * X (Nifty)
The above equation shows us the relationship between Ambuja Cements and Nifty. The positive sign indicates that if Nifty rises then the price of Ambuja Cements shares will also rise and vice-versa. If Nifty rises by 100 points, then Ambuja Cements shares will rises by 48.76.
T-stat for b (Co-efficient of Nifty) is 4.1307 and the P-value is 0.0001 which means that the t-statistic for the slope is 4.13 with 48 degrees of freedom, and the p-value is 0.0002, which is less than 0.05. This means that we can reject the null hypothesis that the slope is zero, and conclude that there is a significant linear relationship between NIFTy and Ambuja Cements at the 5% significance level.
The number of observations is 50. R^2 is 0.2705 which indicates that the model only explains 27% of the variation in the price of Ambuja Cements. the estimate is 4.93, which measures the average deviation of the observed values from the predicted values, and is a measure of the model accuracy
Conclusion:
Beta(β) for our Case is 2.1028.
The price of Ambuja Cements is influenced by the price of NIFTy, but not strongly or consistently. The regression analysis showed that there is a positive but weak linear relationship between the two variables, with a low R-squared and a high standard error. The beta coefficient of 2.10 indicates that Ambuja Cements is more volatile and sensitive to market movements than NIFTy, and thus has a higher risk and a higher expected return.
References:
Historical data of NIFTY and Ambuja C
ements
Information on Ambuja Cements
