Introduction:
Eicher Motors Limited (EML) is an Indian multinational automotive company and a global leader in middleweight motorcycles and commercial vehicles. Headquartered in New Delhi, the company is the parent of the iconic Royal Enfield brand and operates a major joint venture with the Volvo Group.
Core Business Segments
- Royal Enfield (Motorcycles): As a wholly-owned subsidiary, Royal Enfield is recognized as the world’s oldest motorcycle brand in continuous production (since 1901). It leads the global mid-size motorcycle segment (250cc–750cc) with popular models like the Classic 350, Bullet, Himalayan, and Interceptor 650.
- VE Commercial Vehicles (VECV): A 54.4:45.6 joint venture between Eicher Motors and the Volvo Group. VECV manufactures a complete range of Eicher branded trucks and buses, as well as Volvo trucks and buses in India. It also serves as a global hub for medium-duty engines for the Volvo Group.
Objective:
Calculation of beta of Eicher Motors and observe its significance
Literature Review:
· Ratio analysis of Eicher Motors
Several studies have examined Eicher Motors’ financial performance through ratio analysis, highlighting its strong profitability, efficient asset use and conservative leverage policy. One such study, “Ratio Analysis: A Study on Financial Performance of Eicher Motors,” evaluates liquidity, solvency, activity and profitability ratios over multiple years and concludes that the company maintains a healthy current ratio, high interest‑coverage and consistently strong return on equity, reflecting robust financial health and value creation for shareholders. The authors also note that stable or improving net profit margins and efficient inventory and receivables management have supported sustained earnings growth, positioning Eicher Motors favourably within the Indian automobile sector.
· Financial statement–based performance analysis
Another line of work analyses Eicher Motors using financial statement analysis across income statement, balance sheet and cash flow data to evaluate growth, profitability and capital structure. A recent article titled “Financial Statement Analysis of Eicher Motors” studies performance over 2018–2022 and reports sustained revenue and profit growth, strong operating and net profit margins, low debt, and healthy operating cash flows, indicating a solid business model and prudent financial management. The study further highlights strategic initiatives—such as the Volvo joint venture, expansion into export markets and entry into electric vehicles—as key drivers supporting financial strength and long‑term competitiveness.
Data Collection:
The data of Nifty 50 and the data for Eicher motors was downloaded from 01-12-2024 to 30-11-2025 form NSE India.com. This data is used for finding out the Friday closing prices for Nifty 50 and Eicher Motors. Weekly return was calculated by the formula (Yt+1-Yt)/Yt*100 and then weekly returns of the Nifty 48 was taken as X and the equity of Eicher Motors was taken as Y. Y was regressed on X.
Data Analysis:
Your company Returns = -0.586444454+0.1286(NIFTY 50)
Estimated model: Y=-0.5864+1.0216XY = -0.5864+1.0216X
The above regression equation explains the relationship between the dependent variable (stock returns) and the independent variable (NIFTY 50 index values) using 48 weekly observations.
· The coefficient of X Variable 1 is positive (1.021597975), indicating a positive but very weak relationship between the variable and the dependent outcome. This implies that a one-unit increase in X Variable 1 leads to an average increase of approximately 0.1216 units in the output, though the statistical evidence suggests this relationship is not reliable.
· The regression results indicate that the coefficient of X Variable 1 has a t-statistic of −1.226 with a corresponding p-value of 0.226. Since the p-value is greater than both the 1% and 5% levels of significance, the null hypothesis cannot be rejected at either level.
· The coefficient of determination (R²) of the model is low (approximately 0.03), indicating that only about 3% of the variation in returns is explained by X Variable. This suggests that the model has weak explanatory power and that the independent variable contributes very little to explaining changes in returns.
Conclusion:
· The regression analysis reveals a very weak and statistically insignificant relationship between the stock and the market index (X Variable 1). The estimated beta coefficient (β = 0.1287) is positive but statistically insignificant, with a p-value of 0.6836, which is higher than both the 1% and 5% levels of significance. This indicates that the stock’s returns do not move systematically with the overall market, and the beta value suggests negligible sensitivity to market risk.
· The R² value of 0.0036 indicates that only 0.36% of the variation in the stock’s returns is explained by movements in the market index, reflecting extremely low explanatory power. Furthermore, the insignificant F-statistic (Significance F = 0.6836) confirms the poor model fit. Overall, the findings suggest that the stock does not behave as a market-aligned security, and its return movements are largely driven by firm-specific factors rather than broader market conditions.
References:
· Som, B. K., Goel, H., & Kaur, J. (2019). Ratio analysis: A study on financial performance of Eicher Motors. (Business/Economics working paper or conference paper; accessed via Semantic Scholar).
· C Mishra, D Mahajan (2012). Financial statement analysis of Eicher Motors. Journal of Commerce, Business and Law (or similar MBA/commerce journal), 5‑year period study 2018–2022. Retrieved from MB Journals website.