Title: Relationship of Tejas Networks with NIFTY 50.
Author: Tejas Mahajan
Introduction: Tejas Networks is an optical, broadband and data networking products company based in India. The company designs, develops and sells its products to telecom service providers, internet service providers, utilities, security and government entities in 75 countries. The company has built many IPs in multiple areas of telecom networking and has emerged as an exporter to other developing countries including Southeast Asia and Africa. In April 2022, Tata Sons, through Panatone Finvest Limited, increased its shareholding of Tejas Networks to 52.45%, and thus, acquired the majority of Tejas Networks’ shares.
Objective: To calculate the Beta of Tejas Networks and its significance.
Views and Reviews:
“I am proud of what we have built as a company- having a rich portfolio of world-class products for the telecom industry and a solid launchpad for future growth. The association with the Tata Group has only accelerated this journey and I am confident that Tejas is well poised to tap the global market opportunities and become a leading telecom OEM.” – Mr Sanjay Nayak, Current CEO and MD
“Tejas is in a unique position to build industry leading telecom and networking solutions right out of India, for India and the rest of the world.” – Mr Anand Athreya, MD Designate
Data collection: The data for Tejas Network’s closing price was collected from the NSE website. The weekly return of NIFTY has been termed as “X” and the weekly return of Tejas Networks has been termed as “Y”. The sources for the other information mentioned in this report have been provided in the References section.
Data Analysis:
Tejas Networks’ Stock Price = 0.692 + 0.869 × NIFTY Index
The regression analysis indicates a weak relationship between the stock prices of Tejas Networks and the NIFTY index. The coefficient of determination (R-squared) is 0.064, suggesting that only about 6.4% of the variability in Tejas Networks’ stock prices can be explained by changes in the NIFTY index.
The beta coefficient for Tejas Networks, derived from the regression coefficient of the NIFTY index, is approximately 0.869. However, its significance, indicated by the p-value (0.0816), suggests that the beta coefficient may not be statistically significant at conventional levels (such as 0.05).
Conclusion:
While there appears to be some association between Tejas Networks’ stock prices and movements in the broader market represented by the NIFTY index, this relationship is not strong, and the significance of the beta coefficient is borderline. Investors should exercise caution when interpreting this relationship for portfolio management or risk assessment purposes.
References:
https://www.nseindia.com/
https://www.moneycontrol.com/
https://www.tejasnetworks.com/