Author: Ayushi Parekh
Introduction: Adani Enterprises Limited (AEL) plays a pivotal role in the Indian economy, acting as the business incubator for the Adani Group. AEL has diversified operations, with major focus areas including energy, transportation, logistics, and consumer goods, which align with the country’s growing infrastructure and industrial needs. Its portfolio includes high-impact projects such as airports, roads, and water treatment facilities, contributing significantly to national development.
Gautam Adani, as chairman, holds a dominant 70% stake in the company. As of March 2024, AEL’s total assets were valued at an impressive ₹1.617 trillion, reflecting its significant market presence and capital strength.
Objective: Find out the beta of Adani Enterprises Limited and its significance
Data Collection: Data of Adani Enterprises Ltd and Nifty 50 was downloaded from 1 May 2023 to 30 April 2024 from NSE. The data has been manipulated to get Friday closing prices. Weekly returns of Nifty 50 is depicted as “x” and weekly returns of AEL is depicted as “y” and the weekly returns of AEL was regressed on weekly returns of Nifty 50.
Data Analysis: Weekly returns of Adani Enterprises Limited = -0.18 + 2.93 weekly returns of Nifty 50
N = 48, R square = 0.36, F = 26.50, P Value =5.34
The above equation depicts the relationship between weekly returns of AEL and weekly returns of Nifty 50. The plus sign before the coefficient of Nifty 50 tells that If Nifty rises AEL will also rise and vise versa. If Nifty 50 rises one-unit AEL will rise by 0.90 units. (5.14) is the T stat for beta and the P value for which is 5.34, which is more than 0.5 meaning beta is not statistically at 5% level. R square is 0.36 meaning 36% of companies return are explained by Nifty 50, the balance 64% maybe be due to fundamentals. F is 26.50 and the P value is 26.50 meaning the overall model is statistically insignificant.
Conclusion: As beta is 2.93 more than 1 and Nifty is at low, Invest for Short term.