INTRODUCTION:
TVS Motor Company (commonly known as TVS) is an Indian multinational motorcycle manufacturer headquartered in Chennai. It is the third-largest motorcycle company in India in terms of revenue. The company has annual sales of three million units and an annual production capacity of over four million vehicles. TVS Motor Company is also the second largest two-wheeler exporter in India with exports to over 60 countries.
TVS Motor Company is the flagship company of the TVS Group, being the largest company of the group in terms of valuation and turnover. The logo for TVS Motor Company features a red horse.
OBJECTIVE:
To Calculate Beta of TVS Motors and its significance.
VIEWS AND REVIEWS:
Emeritus effective 1st April 2022, by the Board at its
meeting held on 7th February 2022 At the same
meeting, Prof. Sir Ralf Dieter Speth, Non- Executive
Director was appointed as Chairman of the Board
effective 1st April 2022.
Mr Sudarshan Venu was elevated as Managing
Director (MD) effective 5th May 2022 and re-appointed
for a further term of five years from 1st February 2023
to 31st January 2028 with the approval of the
shareholders, including the payment of remuneration.
with the approval of the shareholders, through Postal
Ballot on 14th June 2022. The Central Government
also approved his appointment on 26th September
2022, since he is a non-resident.
Mr H Lakshmanan ceased as a Non-Executive Director
of the Company with effect from 27th June 2022 and
thereby ceased to be part of the Committees in which
he was a member.
Mr B Sriram was appointed as a Non-Executive
Independent Director (NE-ID) of the Company
effective 24th January 2023 by the Board of Directors
based on the recommendation of the Nomination and
Remuneration Committee for a term of five
consecutive years. His appointment was
subsequently approved by the shareholders through
postal ballot on 9th March 2023. The terms of
appointment include the remuneration payable to him
by way of fees and profit related commission.
DATA COLLECTION:
Weekly returns are calculated.
Nifty: Independent Equity: Dependent
CONCLUSION:
TVS MOTORS Returns:
y=−0.38267752−147.2132818× Nifty 50
Beta is more than 1 so we can invest in the company for short term or make the investment for less than 1 year.
Given that the beta coefficient (the coefficient of Nifty 50 in this equation) is negative and greater than 1, it implies a few things:
- Negative Beta: The negative sign indicates an inverse relationship between TVS Motors’ returns and the returns of the Nifty 50 index. In other words, when the Nifty 50 index goes up, TVS Motors’ returns tend to go down, and vice versa.
- Magnitude Greater than 1: A beta coefficient greater than 1 suggests that TVS Motors’ stock is more volatile compared to the Nifty 50 index. This means that for every 1% change in the Nifty 50 index, TVS Motors’ returns are expected to change by approximately -147.21%, according to the given regression equation.
- Investment Recommendation: Typically, a beta greater than 1 indicates higher volatility and potential for higher returns (but also higher risk) compared to the market index. Given that the beta is negative, it’s important to note that the relationship is inverse; however, the magnitude suggests potential for significant short-term gains or losses depending on market movements.
Therefore, based solely on this analysis, investing in TVS Motors for the short term (less than 1 year) could be considered if an investor is comfortable with higher volatility and potential for gains or losses greater than the market index (Nifty 50). However, it’s important to conduct further analysis and consider other factors such as company fundamentals, market conditions, and individual risk tolerance before making any investment decisions.