Title: Relation of JK Tyres & Industries with Nifty50
Author: Juhi Koli
Introduction:
JK Tyres & Industries Limited is one of India’s leading tyre manufacturers, headquartered in Delhi. The company specializes in manufacturing a wide range of tyres, including passenger, commercial, and off-road tyres. It has a significant market presence both in India and globally, with a strong focus on innovation and sustainability.
Objective:
To find out the Beta of JK Tyres & Industries and its significance.
Literature Review:
1. Interview with Sanjeev Aggarwal, CFO of JK Tyres & Industries
In an interview with The Financial Express, Sanjeev Aggarwal, the Chief Financial Officer of JK Tyre & Industries, discussed the company’s strategies to mitigate rising raw material costs and reduce long-term debt. Aggarwal highlighted plans to increase product prices by 2-3% every two to three months and maintain a lower capital expenditure over the next one to two years. He emphasized that core export markets, including North America, South America, and the Middle East, were experiencing robust demand, contributing positively to the company’s financial outlook.
2. JK Tyre’s Commitment to Renewable Energy with RE100 Initiative
Auto Components India reported on JK Tyre becoming the first Indian tire manufacturer to join the RE100 initiative, committing to using 100% renewable electricity by 2050. Dr. Raghupati Singhania, Chairman & Managing Director of JK Tyre, stated that this decision reflects the company’s unwavering commitment to environmental responsibility. Under the motto “today for tomorrow,” JK Tyre aims to drive sustainable practices within the sector, setting a midterm goal to reduce greenhouse gas emission intensity by 50% by FY2030 compared to the base year 2019.
Data Collection:
JK Tyre and Nifty50 data were downloaded for the period 01-01-2024 to 31-12-2024. The data was processed to extract the Friday closing prices, with Nifty50 (X) as the independent variable and JK Tyre (Y) as the dependent variable. A regression analysis was performed to examine the relationship between Nifty50 and JK Tyre’s stock price.
Data Analysis:
Equation: JK Tyres & Industries = -0.00137 + 0.3320 X Nifty50
Interpretation: The regression equation describes the relationship between Nifty50 (X) and JK Tyres & Industries share price (Y), indicating that JK Tyres & Industries share price is the dependent variable, and Nifty50 is the independent variable. The positive coefficient of 0.3320 suggests that for every one-unit increase in Nifty50, JK Tyres & Industries share price is expected to increase by 0.3320 units. With 47 observations (N=47), the model’s R-squared value: 0.0102, implying that approximately 1.02% of the variation in JK Tyres & Industries share price can be explained by changes in Nifty50, leaving 98.98% of the variation attributable to other factors not include in the model. The p-value for the slope is 0.4988, which is greater than the conventional threshold of 0.05, indicating that the relationship between Nifty50 and JK Tyres & Industries share price is not statistically significant at the 5% level. Consequently, this model does not provide strong evidence to suggest a significant linear relationship between Nifty50 and JK Tyres & Industries share price.
Conclusion:
JK Tyres & Industries beta of 0.3320 indicates that it is less volatile than the market and better suited for long-term investment.
Reference:
1. Aggarwal, S. (2024). We intend to reduce our long-term debt by about 40% by FY24. The Financial Express. Retrieved from https://www.financialexpress.com/business/industry-interview-sanjeev-aggarwal-cfo-jk-tyre-industries-we-intend-to-reduce-our-long-term-debt-by-about-40-by-fy24-2410049
2. Singhania, R. (2024). JK Tyre joins RE100: A commitment to 100% renewable energy by 2050. Auto Components India. Retrieved from https://autocomponentsindia.com/jk-tyre-join-re100