Title: Relationship of Ambuja Cements Ltd. with NIFTY 50
Author: Aryan Choudhary
Introduction
Ambuja Cements Limited, a leading player in India’s cement industry, was established in 1981. The company is renowned for its high-quality cement products and has a strong presence across the country. As of October 8, 2024, Ambuja Cements’ market capitalization stood at ₹1,45,459 crore, with an ROE of 10.3%, ROA of 2.46%, and a NIM of 6.90%. Its capital adequacy ratio stood at 14.13%. Ambuja Cements’ annualized Profit After Tax (PAT) for the financial year (FY) 2024 was Rs 4,738 crore, a 119% increase year-on-year.
Objective: To find out the Beta of Ambuja Cements Ltd. and its significance.
Data Collection:
NIFTY 50 and Ambuja Cements Ltd. data was downloaded from the NSE site from 01-04-2023 to 31-03-24. Data was manipulated to get Friday’s Closing price and weekly returns were calculated by the formula ((Yt-1 – Yt )/ Yt)*100.
The weekly returns of Ambuja Cements Ltd. were regressed on weekly returns of NIFTY 50.
Data Analysis:
Weekly returns of Ambuja Cements Ltd. = 0.24 + 1.62* Weekly returns of NIFTY 50
N = 46, R square = 0.32, F = 21.16, P value = 0.000036
The above equation shows the relationship between NIFTY 50 and Aditya Birla Capital Ltd. The positive sign means if Nifty50 rises, Ambuja Cements will also rise and vice versa. The coefficient of NIFTY 50 has a t stat value of 4.60 and the P-value of which is 0.000036, which is less than 0.05 meaning NIFTY 50 is statistically significant to increase the price of Ambuja Cements Ltd.
R Square value is 0.32, meaning 32% of Aditya Birla Capital Ltd. prices are explained by NIFTY 50 and 68% depending on other factors.
The value of F is 21.16 and the value of P is 0.000036, which is less than 0.05 meaning the overall modal is statistically significant.
Conclusion
The coefficient of the weekly return of NIFTY 50 is 1.62 which is greater than 1 and positive which means Ambuja Cements Ltd. is good for short-term investment.