Title– Relationship of Asian paints Ltd with Nifty50
Author-Abhishek Jaiprakash Yadav
Batch– Finance F-3
Roll no-21230023406
Introduction:-
Asian Paints Ltd is an Indian multinational paint company, headquartered in Mumbai, Maharashtra, India. The company is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to home décor, bath fittings and providing related services. Asian Paints is India’s largest paints company by market share. It is the holding company of Berger International. The company’s manufacturing operations encompass 15 countries of the world including India, with considerable presence in the Indian subcontinent and the Middle East.
The company was started in a garage in Gawad, Girgaon , Mumbai by four Gujarati friends Champak Lal Choksy, Chamanlal Choksi, Suryakant Dani and Arvind Vakil. They all belong to Jain families, and founded the company in February 1942. During World War II and the Quit India Movement of 1942, a temporary ban on paint imports left only foreign companies and Shalimar Paints in the market. Asian Paints took up the market and reported an annual turnover of ₹23 crore in 1952 but with only 2% PBT margin. By 1967, it became the leading paints manufacturer in the country. The four families together held the majority shares of the company. But disputes started over the global rights in 1990s when the company expanded beyond India. The disputes resulted in Choksy selling their 13.7% shares and exiting in 1997. Champak Lal died in July 1997 and his son Atul took over. After failed collaboration talks with the British company Imperial Chemical Industries, Choksy’s shares were mutually bought by the remaining three families and Unit Trust of India. As of 2008, the Choksi, Dani and Vakil families hold a share of 47.81%. Ashwin Dani, the non-executive director of Asian Paints, died on September 28, 2023, at the age of 79.
Objective- Calculation of Beta and its Significance
Views and Reviews:
Asian Paints aims to be one of the top five companies in the decorative coatings industry (worldwide) by enlarging its expertise in emerging markets.
- The company is also working to assure environmental compliance and sustainability by focusing on waste minimization and water conservation at all of its plants across India.
- Its mission is to provide paints as per market demand while ensuring the desired level and quality of customer satisfaction. Asian Paints emphasizes the continuous availability of the right product mix at the right time.
- Simultaneously, the company intends to take over the industrial coatings business by forming alliances with established global partner.
- We want to be an innovative, agile, and responsive world class research and technology organisation that’s aligned to future customer needs and catalyses the growth of the company across existing and future businesses.
Data collection:
Data is carried from NSE India site.
Friday closing price of NIFTY50 are followed.
The weekly return of Asian Paints company are followed
The weekly closing returns of Nifty50 are considered X variable, and the weekly closing returns of Asian Paints LTD considered Y variable.
Data collection is done from 1st October 2022 to 30th September 2023.
Data Analysis:
The Regression equation Y=-0.22850 + 0.56191 (X) Nifty50
The above equation shows the relationship between Asian Paints limited weekly closing return and Nifty50 weekly closing return.
R-Square = 0.084%
There will be a 8.4% change in Asian paints due to Nifty50.
Beta= 0.56
P-Value= 0.042
F= 4.36
T-Stat= 2.08
Nifty rises by one rupee then Equity will rise by 56 paise. t-stat for b (co-efficient of Nifty) is 2.08 and the p-value is 0.00, meaning Nifty is statistically significant for Equity at a 4% level. Number of observations are 49. R squared is 0.084, which means 8% of the change in Equity is explained by Nifty, which means 92% is the error due to variables, which are not included in the model. F is 4.36 and the p-value is 0.042, which means the overall model is statistically significant at a 4% level.
Conclusions:
Beta is 0.56
Since Beta is 0.56 which is less than 1, it is advisable to invest for a long time as it is less volatile.
Reference:-
https://www.nseindia.com/reports-indices-historical-index-data
https://www.nseindia.com/get-quotes/equity?symbol=ASIANPAINT
https://www.nseindia.com/market-data/live-market-indices
https://en.wikipedia.org/wiki/Asian_Paints