Relationship of NMDC with Nifty50.
Author: Nisha Mehate
Intro: NMDC Limited, formerly National Mineral Development Corporation, is an Indian public sector undertaking involved in the exploration of iron ore, copper, rock phosphate, limestone, dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite, coal etc. It is India’s largest iron ore producer and exporter, producing more than 35 million tons of iron ore from three mechanized mines in Chhattisgarh and Karnataka. It also operates the only mechanized diamond mine in the country at Panna in Madhya Pradesh.
Objective: To calculate Beta and its significance.
Views and Reviews: NMDC’s share price has given a return of ~15% in the last one year (from ~₹ 103 in February 2022 to ~₹ 118 levels in February 2023). We value NMDC at ₹ 140, 5x FY24E EV/EBITDA
Data collection: Nifty and NMDC’s closing price was collected from NSE website and Yahoo finance. Weekly return of Nifty is termed as “X” and weekly return of NMDC is termed as “Y”. Besides that, a few other things written in this report are taken from other websites and its information is provided in references.
Data Analysis:
Equation: Y= 0.0104 + 0.1035x
Interpretation:
The above equation shows the relation between Nifty50 and NMDC.
Return of NMDC is dependent variable and return of Nifty50 is independent variable.
“+” sign means if Nifty50 rises by 1 unit then share price of NMDC will also rise by 0.103521 and vice-versa
Number of observations are 48
0.263 is the t-stat for Y, the p-value for which is 0.793724764.
R square is 0.001501 which means 0.150% of variances in NMDC are explained by Nifty.
Here the standard error is 3.8% . This is happened due to the variable which are not in the model.
Here F value is the 0.069169 and the P value is 0.793724764 which means overall model is not significant .
Conclusion: Beta is which is less than 1, it means that NMDC is good for long term investment.
Reference:
https://www.livemint.com/market/market-stats/stocks-south-indian-bank-share-price-nse-bse-s0003300