Title: Relationship of Honda India Power Ltd. with Nifty 50
Author: Harsh Naik
Introduction:
Honda India Power Products Ltd. (HIPP), a subsidiary of Honda Motor Co. Japan, was founded in 1985. It manufactures power equipment like generators, water pumps, and engines, serving industries such as agriculture and construction. Company reported a revenue of ₹1,116.89 crore for the financial year ending March 2024, with its stock rising by 69.03%.
Objective:
To find out Beta of Honda company and its significance.
Data Collection:
Data for Nifty 50 and Honda India Power Ltd was downloaded for period 01-05-2023 to 30-04-2024 from NSE site. Then we find out Friday closing prices for Nifty 50 and Honda Ltd., Weekly returns were calculated by the formula = (yt+1 – yt) / yt * 100. Weekly returns of Nifty 50 were termed as ‘X’ and weekly returns of Honda India Power Ltd were termed as ‘Y’. ‘Y’ was regress on ‘X’.
Data Analysis:
Weekly return of Honda company= 0.29 + 0.45 * weekly return of Nifty 50 N= 48, R square= 0.01, F= 0.64, P value= 0.43
The above equation shows the relationship between nifty 50 and Honda company. Positive sign before the coefficient of Nifty 50 tells us that there is a positive relationship, if Nifty 50 rises by 1-unit, Honda Ltd will rise by 0.45 and vice versa. Figure in bracket is a T- Stats (0.80) for Beta and P value is 0.43. Since the P value is greater than 0.05, the beta is not statistically significant. R Square is 1% Honda’s weekly return is explained by changes in the nifty 50. F is 0.64 and P value for that is 0.43 Since the F Test and P value is greater than 0.05, the overall model is not statistically significant at the 5% level.
Conclusion:
Beta is less than 1 and positive i.e. 0.45 means Honda India Power Ltd is good for long term investment.