AUTHOR : MADHUR GUPTA
COMPANY : MARUTI SUZUKI INDIA LTD
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INTRODUCTION :
Maruti Suzuki India Limited (MSIL), a subsidiary of Suzuki Motor Corporation, Japan, stands as the largest passenger car manufacturer in India, widely recognized for spearheading the nation’s automotive evolution. Established in February 1981 as Maruti Udyog Limited through a collaboration between the Indian government and Suzuki Motor Corporation, it has since grown into a dominant force. With a diverse lineup of 16 car models and over 150 variants, Maruti Suzuki caters to a broad market segment, ranging from entry-level small cars like Alto 800 and Alto K10 to the sophisticated luxury sedan Ciaz.
From its humble origins with the iconic Maruti 800, the company has expanded its operations, encompassing activities such as pre-owned car sales, fleet management, and car financing. Manufacturing facilities in Gurgaon and Manesar, Haryana, coupled with a cutting-edge R&D center in Rohtak, reflect the company’s commitment to innovation and excellence. Presently, Suzuki Motor Corporation holds a majority equity of 56.2%, and Maruti Suzuki’s shares are actively traded on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
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OBJECTIVE :
To calculate beta and its significance
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VIEWS AND REVIEWS :
1) Shri Chandra Bhushan Singh (IAS), Transport Commissioner, Government of Uttar Pradesh, expressed immense satisfaction in collaborating with Maruti Suzuki to enhance the scientific and transparent issuance of driving licenses. The Memorandum of Agreement (MoA) focuses on automating test tracks at Driver Training and Testing Institutes (DTTIs) in Ayodhya, Gorakhpur, Mathura, Prayagraj, and Varanasi. This initiative aims to bolster road safety, reduce accidents, and ultimately save lives.
2) Mr. Shashank Srivastava, Senior Executive Officer, Marketing & Sales at Maruti Suzuki India Limited, conveyed pride in the company’s partnership with the Indian Navy’s ‘Khamree Mo Sikkim’ drive, embodying India’s resilient spirit. He emphasized Maruti Suzuki’s commitment to advancing progress in the Northeastern region and nurturing the potential of the nation’s youth. Commodore Mohit Goel, Commanding Officer, INS Shivaji, Indian Navy, highlighted the collaborative effort to contribute to Northeast India’s progress and well-being. The initiative aims to inspire youth about Navy opportunities and strengthen connections within local communities.
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DATA COLLECTION :
I have retrieved the historical data of Nifty 50 from the NSE India website for the period from 01/10/2022 to 30/09/2023. After obtaining the complete dataset, I filtered the data to include only Fridays and sorted the information accordingly. Utilizing the closing data of Nifty 50 during this timeframe, I calculated return values based on the return formula.
Similarly, I gathered the historical equity data for Maruti Suzuki from the NSE India website spanning from 01/10/2022 to 30/09/2023. Following the comprehensive data collection, I filtered and sorted the information to retain only Friday’s data. Subsequently, return values were calculated based on the closing prices of Maruti Suzuki equity during the specified period.
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DATA ANALYSIS :
The provided equation (Maruti Suzuki = 0.21 + 0.79 * Nifty) signifies the relationship between Maruti Suzuki equity price and the Nifty 50 index price. Maruti Suzuki is the dependent variable, and Nifty 50 serves as the independent variable. The positive coefficient (0.79) with a “T” sign indicates that when Nifty rises, Maruti Suzuki also tends to rise, and vice versa. Specifically, for every 1 unit increase in Nifty, Maruti Suzuki is expected to increase by 79 paisa.
The statistical analysis reveals that the coefficient of Nifty (0.79) is statistically significant at the one percent level (P value = 0.00), indicating its importance in predicting Maruti Suzuki’s equity price.
With 49 observations, the R square of 0.19 suggests that 19% of the variation in Maruti Suzuki can be explained by Nifty, while the remaining 81% is attributed to unaccounted variables.
The overall model is statistically significant (F = 11.74, P value = 0.00), reinforcing the validity of the relationship between Nifty and Maruti Suzuki.
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CONCLUSION :
The beta value of 0.79, being less than 1, suggests that Maruti Suzuki is favorable for long-term investment. This implies a less volatile response to market fluctuations, making it a potentially stable investment option.
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REFERENCE :
1. https://www.nseindia.com/reports-indices-historical-index-data
2. https://www.nseindia.com/get-quotes/equity?symbol=MARUTI
3. https://www.marutisuzuki.com/corporate/media/press-releases/2023/september/media-release-msil-x- indian-navy