Author Name: Sahil Patil

Introduction to Sagar Cements Ltd.

Sagar Cements Ltd. is a leading Indian cement manufacturer with operations primarily in the southern states. Established in 1981, the company has grown steadily by focusing on quality production, capacity expansion, and sustainable practices. With a strong presence in the market and significant experience in the industry, Sagar Cements continues to play an important role in India’s infrastructure development.

Objective

The objective of this study is to determine the beta value of Sagar Cements Ltd. relative to the Nifty 50 index. Beta measures the stock’s volatility compared to the market. This analysis will help investors assess the risk associated with Sagar Cements’ stock and make informed investment decisions.

Literature Review

Beta and Nifty 50

Chaudhuri and Raju (2009) analyzed the beta estimation for companies listed on the Nifty 50 index. Their study found that higher beta companies are more volatile and respond significantly to market fluctuations, making beta an essential factor in equity valuation and risk management.

Beta and Equity Returns

Jain and Singh (2012) explored the relationship between beta and equity returns for Nifty 50 companies. They concluded that companies with higher beta generally have higher equity returns in bullish markets, but lower returns in bearish markets, emphasizing beta’s role in stock performance.

Data Collection

Data for Sagar Cements Ltd. and Nifty 50 was downloaded for the period from 1st January 2024 to 31st December 2024. The data was manipulated to calculate the Friday closing prices for both indices. The Nifty 50 was represented as X and Sagar Cements Ltd. as Y. A linear regression analysis was performed where Y was regressed on X.

Data Analysis

The regression equation is

Y = -0.00678 + 1.2247X

What This Means:

-0.00678 → This is the starting value of Y when X is 0.
1.2247 → For every 1-unit increase in Nifty 50 return, Sagar Cements’ return increases by 1.2247 units.

The p-value (0.000839) shows that X significantly affects Y.

The model explains approximately 22.16% of the variation in Sagar Cements’ returns, meaning other factors also influence Y.

The model is statistically significant and somewhat useful for understanding volatility trends.

To improve prediction accuracy, incorporating more relevant variables is recommended.

Conclusion

Since the Beta (1.2247) is more than 1, it indicates that Sagar Cements Ltd. is highly volatile compared to the market. This suggests that the stock may offer greater returns during bullish periods but can also be riskier during downturns. Therefore, it may be preferable for short-term investment strategies or for investors with higher risk tolerance.

Reference :-

Reference: Chaudhuri, S., & Raju, A. (2009). Beta Estimation and its Impact on the Indian Stock Market. Journal of Financial Risk Management, 7(2), 43-58.

Reference: Jain, P., & Singh, S. (2012). The Impact of Beta on Equity Returns: Evidence from Nifty 50 Companies. Indian Journal of Finance, 6(10), 31-45.