Title: Relation of Mazagon Dock Shipbuilders with Nifty50
Author: Mayur Dubule
Introduction:
Mazagon Dock Shipbuilders Limited (MDL), commonly known as Mazagon Shipbuilders, is India’s leading shipyard, located in Mazagaon, Mumbai. It is a public sector undertaking (PSU) under the Ministry of Defence, Government of India. Established in 1934 and nationalized in 1960, MDL specializes in building warships, submarines, and commercial vessels. The shipyard plays a crucial role in strengthening India’s naval defense by constructing advanced stealth frigates, destroyers, and submarines for the Indian Navy. It is also involved in ship repair and offshore fabrication. MDL has contributed to notable defense projects, including the Kalvari-class submarines (Scorpene-class) and the Visakhapatnam-class destroyers. Over the years, Mazagon Dock has grown into a premier defense shipyard, integrating state-of-the-art technology and collaborations with international firms to enhance its shipbuilding capabilities.
Objective:
To find out the Beta of Mazagon and it’s significance
Literature Review:
New Approaches to Shipbuilding Capacity Assessments
Gourdon, Daniel et al (2023) presents that refined methodologies for evaluating shipbuilding capacity. It highlights the limitations of traditional yard-by-yard production assessments and proposes using average production figures to smooth out fluctuations. The study also emphasizes firm-level indicators, such as productivity metrics, to provide a more accurate capacity estimation. Additionally, it examines how mergers and acquisitions impact capacity, underscoring the need for dynamic assessment models. By integrating these methodologies, the report offers a more comprehensive approach to understanding shipbuilding capacity, aiding policymakers and industry stakeholders in addressing excess capacity issues.
Impact of Shipbuilding Capacity on Economic Growth
David (2017) stated that investigates the relationship between shipbuilding capacity and economic growth across various countries. Utilizing panel data from 1990 to 2015, the authors employ econometric models to assess how fluctuations in shipbuilding capacity influence GDP growth rates. The findings suggest a positive correlation between enhanced shipbuilding capacity and economic growth, particularly in developing nations where maritime industries play a pivotal role in trade and employment. The study contributes to existing literature by highlighting the significance of industrial capacity in fostering economic development and underscores the need for policies that support the expansion of critical industries like shipbuilding.
Data Collection:
Mazagon Shipbuilders and Nifty50 data was download for period 1-1-24 to 31-12-24 and data was manipulated to find out the Friday closing prices were calculated of Nifty50 = X and Mazagon Shipbuilders = Y, Y was regression on X
Data Analysis:
Equation: Mazagon Dock = 1.623 + 1.636 Nifty50
Interpretation: The regression equation describes the relationship between Nifty50 (X) and Mazagon Dock share price (Y), indicating that Mazagon Dock’s share price is the dependent variable, while Nifty50 is the independent variable. The positive coefficient of 1.636 suggests that for every unit increase in Nifty50, the Mazagon Dock share price is expected to increase by 1.636 units. With 46 observations (N = 47), the (R^2) value is 0.09048, implying that approximately 9.05% of the variation in Mazagon Dock’s share price can be explained by changes in Nifty50. The F-value for the model is 4.37. The p-value for the slope is 0.0422, which is less than the conventional threshold of 0.05. This indicates that the relationship between Nifty50 and Mazagon Dock’s share price is statistically significant at the 5% level. Consequently, this model provides evidence to suggest a significant linear relationship between Nifty50 and Mazagon Dock’s share price.
Conclusion:
Mazagon Dock’s beta of 1.64 indicates that it is more volatile than the market and better suited for short-term investment.
Reference:
Karin Gourdon & Laurent Daniel & Takuya Adachi & Emilie Berger, 2023. “New approaches to shipbuilding capacity assessments,” OECD Science, Technology and Industry Policy Papers 140, OECD Publishing.
David Perry, 2017. “2016 Status Report on Major Equipment Procurement,” SPP Research Papers, The School of Public Policy, University of Calgary, vol. 10(22), September.