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Details Analysis of financial overview of a company

Details Analysis of financial overview of a company -...

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B11097 The relevant values have also been calculated for peer group company – Rajesh Exports Ltd. All the calculations have been explained in detail in B11097_4.xls. The excel sheet is sent along with the submission. Please refer to the same. AVERAGE RETURNS, GEOMETRIC RETURNS, STANDARD DEVIATION, BETA CALCULATION Beta of Security= Covariance of the security with the market / Variance of the market For weekly data of 5 years Friday is considered as closing day. All returns are calculated on closing prices. Daily Calculations Parameter Gitanjali Rajesh BSE Average Mean 0.141054 0.143842 -0.0688761 Geometric Mean 1.00088646 1.00107269 0.99923315 Geometric Avg Returns 0.088646 0.107269 -0.0766846 Variance 10.3399221 7.47903629 1.5622507 Standard Deviation 3.21557493 2.73478268 1.24990028 Covariance 1.67880166 1.28677032 Beta 1.074605 0.823664 Weekly Calculations Calculations Gitanjali Rajesh BSE Average Mean 0.653067 0.495374 0.17205206 Geometric Mean 1.00190428 0.99825075 1.00095225 Geometric Avg Returns 0.190428 -0.174925 0.09522512 Variance 91.9360836 104.792804 15.2955549 Standard Deviation 9.5883306 10.2368356 3.9109532 Covariance 19.5360631 15.6785645 Beta 1.277238 1.025041 COMPARISON WITH BETA OF PEER COMPANY We see that for both the time periods considered, the beta value of Gitanjali Gems Ltd is greater than that of Rajesh Exports Ltd by over 25%. This could mean that the stock of Gitanjali is riskier. This may be because of the aggressive expansion of the company in the highly competitive market, especially in its increasing retail footprint. The high amount of capex has also resulted in a smaller profit margin which is reflected in its stock value. It must be noted, however, that the R 2 values for both companies are far less than 1 and therefore, the regression does not provide a very fair picture of the company’s risk evaluation.
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