AUTHOR: – Manju Yadav (F-1)
Roll. No.: -21230023048
INTRODUCTION:
Mahindra & Mahindra Limited (M&M) is a multinational automotive manufacturing corporation headquartered in Mumbai, India. It’s a part of the Mahindra Group, one of the largest vehicle manufacturers by production in India.
- Founded in 1945 as Mahindra & Mohammed by brothers Kailash Chandra Mahindra and Jagdish Chandra Mahindra, along with Malik Ghulam Muhammad.
- Renamed Mahindra & Mahindra in 1948.
- Initially started as a steel trading company, but soon diversified into vehicle manufacturing.
- Mahindra is best known for its SUVs, tractors, and commercial vehicles.
OBJECTIVE:
To Calculate Beta(β) and its significance of the equity stock of Mahindra & Mahindra Ltd.
VIEWS / REVIEWS: –
Jiten Desai, Portfolio Manager at Edelweiss Capital:
“Mahindra & Mahindra has impressed me with its recent financial performance. Surpassing their 3-year revenue CAGR and exceeding their 5-year average ROE is no small feat. They’re clearly firing on all cylinders. This, coupled with their proactive push into the electric vehicle space, positions them for solid future growth. Let’s not forget the diversification they enjoy across farm equipment, construction equipment, and financial services. That kind of spread provides much-needed resilience during market downturns. Overall, I see M&M as a compelling investment opportunity.”
Priya Shah, Research Analyst at Motilal Oswal:
“While I recognize Mahindra & Mahindra’s strengths, I have some reservations about their current valuation. The recent stock price rally feels a bit ahead of itself, potentially outpacing the company’s underlying fundamentals. We can’t ignore the potential headwinds from rising interest rates and inflation, which could dampen demand for their products. Additionally, the EV market is heating up, with established players and new entrants vying for market share. M&M will need to navigate this competitive landscape carefully to maintain their position. My recommendation is to approach M&M with cautious optimism, evaluating market conditions and competitor activity closely before making any investment decisions.”
Data Collection:
Data was downloaded from nseindia.com for 01/11/2022 to 31/10/2023 for Nifty as well as for Mahindra & Mahindra.
All the columns were deleted for both the sheets except date and closing price and the Friday closing price were found for both. Weekly returns for Nifty and M & M Ltd. were calculated, X being Nifty50 and Y being M & M ltd. Finally, data analysis was done.
Weekly returns of Nifty = X
Weekly returns of M & M ltd. Equity = Y
Linear Regression was performed.
Data Analysis:
The regression equation form:
Y = a + b*X
Where, Y is the dependent variable- M & M ltd.,
X is the independent variable- Nifty 50
a is the intercept,
b is the slope.
Intercept, a = 0.1724
Slope, b = 1.0522
R Square = 0.23
F = 14.375
So, the regression equation is given by-
M & M ltd. = a + b(Nifty50)
Y = 0.1724+ 1.0522* X
The above equation shows us the relationship between Patanjali Foods Ltd and Nifty.
Regression Coefficient: The regression coefficient of Nifty50 is 1.0522 which indicates that for every 1 unit increase in the Nifty50, prices of M & M ltd shares are expected to increase by Rs. 1.0522.
R Square: In this case, the R Square is 0.23, which indicates that 23% of the sample variation in the M & M ltd. Share prices is explained by the Nifty. Remaining 77% of the total variation in the M & M share prices is unexplained.
Stating Hypothesis:
Null Hypothesis (H0): M & M share prices are not significantly affected by the Nifty50.
Alternate Hypothesis (H1): M & M share prices are significantly affected by the Nifty50.
Is the overall model significant?
At 5% level of significance, if the P value is less than 0.05, then we reject the null hypothesis. From the ANOVA Table, it can be observed that the significance F value is less than 0.05, hence we reject H0.
Thus, we can conclude that the model is significant, and the M & M share prices are significantly affected by the Nifty50.
Conclusion:
Beta is 1.0522, which is greater than 1, it means M & M Ltd is good for short-term investment.