Title: Relationship of Poonawalla Fincorp Ltd. with Nifty 50
Author: Pravin Phulware
Introduction: Poonawalla Fincorp is a leading non-banking financial company (NBFC) in India, providing a wide range of financial services including personal loans, business loans, and housing finance. The company focuses on delivering tech-driven and customer-centric financial solutions. The total number of equity shares is 76,65,74,817 with a face value of ₹2 each. The symbol of the Poonawalla Fincorp share is POONAWALLA.
Objective: To find out Beta of Poonawalla Fincorp and its significance.
Data Collection: Data of Poonawalla Fincorp and Nifty 50 was downloaded from 01/05/23 to 30/04/24 taken from NSE, then data is manipulated to get Friday closing prices.
Weekly returns of Nifty 50 were taken as X and weekly return of Poonawalla Fincorp is taken as Y, then weekly returns of both were calculated, Weekly return of Poonawalla Fincorp was regressed on weekly returns of Nifty 50.
Data Analysis:
Weekly return of Poonawalla Fincorp = (-0.86) + (0.28) weekly return of Nifty 50
(0.59)
N = 48, R square = 0.007, F = 0.35, P value = 0.55
Interpretation: The above equation depicts the relationship between weekly returns of JU Poonawalla Fincorp and weekly returns of Nifty 50.
The plus sign before the coefficient of Nifty 50 tells that if Nifty rises your competition will also rise & vice versa, If Nifty rises by one-unit Poonawalla Fincorp will rise by 0.90-unit, figure in the bracket is T stat for beta.
The p value for which 0.55 which is more than 0.05 meaning beta is statistically not significant at 5% level.
R square is 0.007 meaning 0.7% of company’s return are explained by Nifty 50 the balance 33% may be due to fundamentals.
F is 0.35 & P value is 0.55 meaning overall model is statistically insignificant.
Conclusion: As beta is 0.28 meaning the value is less than 1, hence invest for long term.