INTRODUCTION
\nProcter & Gamble Health Limited was set up in India as one of Merck\u2019s Asian subsidiaries in 1967. It was also the first Merck Group Company to go public in the year 1981. Till 2018, the Company was operating in all businesses included in the pharmaceuticals and chemicals businesses in the country.
\nOn December 1st, 2018, P&G successfully completed the acquisition of Merck\u2019s Consumer Health business further to approval of all relevant regulatory authorities and the fulfilment of other customary closing conditions. Procter & Gamble Overseas India B.V. now holds 51.81% of the share capital in Merck Limited, while the remaining 48.19% is traded on the Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd.
\nToday, Procter & Gamble Health Limited is one of India\u2019s largest VMS Companies manufacturing and marketing over-the-counter products, vitamins, minerals, and supplements products for a healthy lifestyle and improved quality of life.
\nWith a strong portfolio of brands backed by science and trusted by doctors, pharmacists and consumers, Procter & Gamble Health Limited combines the best of P&G and Legacy Merck\u2019s Consumer Health capabilities and cultures. Together we are working towards leveraging our combined expertise to develop categories and brands that meet today\u2019s needs and tomorrow\u2019s opportunities.<\/p>\n
OBJECTIVE
\nTo calculate beta of the company and find its significance<\/p>\n
VIEWS
\nIn high finance, the key ratio used to measure how well a company converts reported profits into free cash flow (FCF) is the accrual ratio (from cashflow). The accrual ratio subtracts the FCF from the profit for a given period, and divides the result by the average operating assets of the company over that time. This ratio tells us how much of a company’s profit is not backed by free cashflow.
\nAs a result, a negative accrual ratio is a positive for the company, and a positive accrual ratio is a negative. That is not intended to imply we should worry about a positive accrual ratio, but it’s worth noting where the accrual ratio is rather high. That’s because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth.
\nOver the twelve months to December 2021, Procter & Gamble Health recorded an accrual ratio of 0.20. We can therefore deduce that its free cash flow fell well short of covering its statutory profit. In fact, it had free cash flow of \u20b9816m in the last year, which was a lot less than its statutory profit of \u20b91.50b. Procter & Gamble Health’s free cash flow actually declined over the last year, but it may bounce back next year, since free cash flow is often more volatile than accounting profits.<\/p>\n
DATA COLLECTION
\nData of index and equity were collected from https:\/\/www1.nseindia.com\/ and https:\/\/www.nseindia.com\/ respectively. Daily returns from 1st March-2021 to 28 Feb-2022 were downloaded in excel format from these websites and it was sorted into weekly format. Then weekly returns were calculated for both index and equity and then regression analysis was done.<\/p>\n
DATA ANALYSIS
\nPredicted Y= -0.0085 + 0.302028x
\nN= 47
\nR Square= 0.055778
\nF= 2.658301
\nT stat (Beta)= 1.63043
\nT stat (0.05,45) = 2.0141 <\/p>\n
The above regression equation tells us the relationship between X and Y. Where X is NIFTY\u2019s weekly returns and Y is PGHL\u2019s weekly returns.
\nThe positive sign of Beta tells us the that there is a positive relationship between NIFTY and PGHL\u2019s weekly returns.
\nFrom the equation, it can be seen that if X falls by 1 unit, Y will fall by 0.302028 units.<\/p>\n
T calculated is less that T tabulated which means, \u03b2 is statistically insignificant at 5% confidence level.
\nR^2 is 0.055778 which means 5% of Y (PGHL Ltd) is explained by X. And the balance is explained by error.
\nF is 2.658301 which is more than table value which means model is statistically significant at 5% level.<\/p>\n
CONCLUSION
\n\u03b2 is statistically significant in case of NIFTY and PGHL ltd. Also, it can be concluded that Reliance Industries ltd is a high beta share. Since it is more than 1.<\/p>\n","protected":false},"excerpt":{"rendered":"
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