Introduction:
Shree Cement Limited is one of India’s premier cement manufacturers, established in 1979. It is currently among the top three cement producers in the country with an installed capacity of over 46.4 Million Tonnes Per Annum (MTPA) in India. The company is headquartered in Kolkata and operates manufacturing units across several Indian states.
- Key Brands: The company markets its products under well-known brands such as Bangur Cement, Shree Jung Rodhak Cement, and Roofon.
- Strategic Focus: Shree Cement is renowned for its focus on cost leadership, operational efficiency, and sustainability. It has pioneered several innovations in energy conservation and waste utilization, making it one of the most efficient cement producers globally.
- Vision: To lead the industry through sustainability, innovation, and operational excellence while delivering value to all stakeholders.
Objective:
The primary objective of this study is to analyse the systematic risk of Shree Cement Limited Ltd. relative to the broader market (Nifty 50 Index). Specifically, the study aims to:
- Calculate the Beta (β) coefficient of Shree Cement Limited.
- Determine the stock’s volatility compared to the market benchmark.
- Assess whether the stock acts as an aggressive or defensive investment during the analysed period.
Literature Review:
The relationship between stock returns and market indices has been extensively studied in financial literature, primarily through the Capital Asset Pricing Model (CAPM). Sharpe (1964), Lintner (1965), and Mossin (1966) established that a security’s expected return is linearly related to its systematic risk, measured by Beta (β), which captures the sensitivity of a stock’s returns to market movements.
Several empirical studies have examined the applicability of CAPM and Beta in emerging markets like India. Banz (1981) and Fama and French (1992) questioned the sufficiency of Beta alone in explaining stock returns, suggesting that firm-specific fundamentals also play a significant role. However, later studies confirmed that Beta continues to be a useful indicator of market-related risk, particularly for large-cap stocks included in benchmark indices such as the Nifty 50.
Data Collection:
The data for this analysis was sourced from the provided financial dataset covering the period from December 1, 2024, to November 30, 2025.
- Stock: Shree Cement Ltd. (Closing Prices).
- Market Index: Nifty 50 (Closing Prices).
- Frequency: Weekly closing prices were used to calculate weekly returns.
- Observation Count: 48 weekly data points.
- Variables:
- Independent Variable (X): Weekly Returns of NIFTY 50 Index.
- Dependent Variable (Y): Weekly Returns of SHREECEM.
Data Analysis:
· Regression Equation:
Shree Cement (Y) = 0.1691 + 0.6975 * Nifty 50 (X)
· Other Variables:
o T-Stat: 3.4602
o No. of Observations (n): 48
o R^2: 0.2065
o F- Stat: 11.9728
o P- Value: 0.0012
· Interpretation:
o The regression equation above describes the relationship between the Weekly Return of Nifty 50 (X) and the share price of Shree Cement Limited (Y). A positive coefficient of X indicates a direct relationship.
o If the weekly price of Nifty 50 rises by 1%, the weekly price of Shree Cement Limited will rise by 0.69% and vice versa.
o The t-stat for Beta (coefficient of Weekly Return of Nifty (X)) is 3.4602, and the p-value is 0.0012, which is less than 0.05, indicating that Beta (β) is statistically significant at the 5% level.
o The number of observations is 48, and R^2 is 0.2065, meaning that 20.65% of the variation in the Weekly Return of Shree Cement Limited (Y) is explained by the Weekly Return of Nifty (X), while the remaining 79.35% is attributed to other factors not included in the model, such as equity fundamentals.
o This is a good sign, as the Nifty index influence is less, and the company fundamentals are strong. The F-stat is 11.9728, and the p-value is 0.0012, indicating that the overall model is statistically significant at the 5% level.
Conclusion:
Since Beta (β) = 0.6975, which is less than 1, the stock is a defensive one, and one must invest in this company for the long term if Nifty is expected to rise.
References:
1. Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. Journal of Finance, 19(3), 425–442.
2. Lintner, J. (1965). The valuation of risk assets and the selection of risky investments in stock portfolios and capital budgets. Review of Economics and Statistics, 47(1), 13–37.
3. Mossin, J. (1966). Equilibrium in a capital asset market. Econometrica, 34(4), 768–783.