Title: Relationship of Larsen & Toubro Ltd. with Nifty50.

Author: Lance Shah.

Introduction: Larsen & Toubro Limited (L&T) is a prominent Indian multinational conglomerate founded in 1938. Renowned for engineering, construction, and technology solutions, L&T operates globally with diversified interests in sectors like infrastructure, information technology, and financial services. The company emphasizes innovation, sustainability, and social responsibility in its business practices..

Objectives: To calculate beta and find its significance.

Views & Reviews: Larsen & Toubro Ltd past 10-year financial track record analysis suggests it’s an average-quality company. Valuation ratios indicate it is currently overvalued. Despite being in the overvalued zone, the Price Trend analysis suggests a strong short-term rise. Potential investors should consider both quality and valuation factors before deciding to invest.

Data collection:

Data is downloaded from https://www.nseindia.com/reports-indices-historical-index-data , https://www.nseindia.com/get-quotes/equity?symbol=LT for 1-12-2022 to 30-11-2023 period.

Data analysis:

Regression Equation: Return of Britannia = 0.6763+0.9388(Return of Nifty 50)

                                       R Square = 0.2279                (3.7251)

                                       F = 13.8763

Interpretation: In the above equation shows the relationship between Nifty 50 and Larsen & Toubro Ltd. share. Return of Larsen & Toubro Ltd. is dependent variable and Return of Nifty 50 is independent variable. Positive sign means if Nifty 50 price rises, Larsen & Toubro Ltd. share price rises. If Nifty 50 price rises 1 unit, Larsen & Toubro Ltd. share price will rise by 0.9388 unit & vice versa. No of observation are 49. Figure which is written in bracket 3.7251 is t test for b. The P value for which is 0.0005 which means Nifty 50 is statistically significant at 5% level. R square is 0.2279 which means 22.79% of variances in Larsen & Toubro Ltd. share price are explained by Nifty 50 in other words 77.21% is error means 77.21%

 is due to the variables which are no in the model. F is 13.8763. Overall model is statistically significant at 5% level.

Conclusion: Beta is 0.6793 is less than 1 it means Larsen & Toubro Ltd. is good for long term investment.

 

 

References:

https://www.nseindia.com/reports-indices-historical-index-data https://www.nseindia.com/get-quotes/equity?symbol=LT