Author: Simica Mallick
Introduction
Sobha Limited is a prominent Indian real estate developer, known for its backward-integrated business model and focus on quality and customer satisfaction, with projects spanning across various cities in India and internationally. Nifty 50 is the benchmark stock market index of the National Stock Exchange (NSE) of India. It represents the weighted average of the 50 largest and most liquid companies across various sectors in the Indian stock market. This study explores the relationship between Sobha Limited stock performance and NIFTY50.
Objective: To find out the Beta of Sobha Limited and its significance
Literature Review
1.Risk Factors in Indian non-listed Real Estate Funds
Ashish (2017) states that the risks associated with non-listed real estate funds in India, particularly in light of events like the 2008 Global Financial Crisis and India’s 2016 demonetization. It highlights the importance of risk assessment across the investment lifecycle—entry, monitoring, and exit—especially in an emerging economy with transparency and governance challenges. Given the lack of academic research in India on this topic, the study will use primary surveys of real estate professionals and factor analysis to identify key risks. With India’s growing economy, the potential introduction of REITs, and increased transparency, this research aims to help institutional investors better understand real estate investment risks.
2.Energy Efficiency Process Improvement in the Indian Real Estate Industry
Ariyil & Weerakoon (2024) presents the environmental impact of India’s growing real estate sector by analysing energy efficiency practices using Building Information Modelling (BIM) simulations. Using a mixed-method approach, it integrates qualitative literature review and quantitative survey data, analysed through factor analysis with the Kaiser–Meyer–Olkin (KMO) test and principal component analysis (PCA). The findings emphasize the need to enhance BIM adoption, tailor energy efficiency strategies to local contexts, foster industry collaboration, implement monitoring mechanisms, and invest in research and development. These insights aim to support stakeholders in promoting sustainable real estate development in India.
Data Collection
Sobha Limited and Nifty 50 data was downloaded from NSE site for the period 01-01-2024 to 31-12-2024 and the data was manipulated to find out the Friday closing prices, weekly returns were calculated, weekly returns of Nifty 50 is X and weekly returns of Sobha Limited is Y. Y was regressed on X.
Data Analysis
The equation is Equity = 0.323+1.912 NIFTY50
(0.363)
Number of observations (N) = 47, f = 12.650, r2 = 0.219
Interpretation of the equation
The above equation shows the relationship between NIFTY50 and Equity. Equity is a dependent variable and NIFTY50 is an independent variable. Positive sign means there is direct relationship between equity and NIFTY50 meaning if NIFTY50 rises, equity rises and if NIFTY50 falls equity falls. If NIFTY50 rises by 1 rupee, equity will rise by 1.912 units. Figure in bracket () is t-stat and the p value for this is 0.717 which is more than 0.05 meaning NIFTY50 is not statistically significant at 5% level. Number of observations are 47, r² = 0.219 which means 21.90% of equity is explained by NIFTY50, balance 78.10% is the error model. F= 12.650 and the p value or the significance value is 0.717 which is more than 0.05 which means overall the model is not statistically significant at 5% level.
Conclusion
The beta value is 1.912, which is more than 1, meaning it is good for short term investment.
References
Ashish Gupta, 2017. “Risk Factors in Indian non-listed Real Estate Funds,” ERES eres2017_35, European Real Estate Society (ERES).
Ariyil Prajin & Weerakoon Thilina Ganganath, 2024. “Energy Efficiency Process Improvement in the Indian Real Estate Industry,” Baltic Journal of Real Estate Economics and Construction Management, Sciendo, vol. 12(1), pages 166-183.