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Term paper of

Quantitative technique
Analysis of share price of M&M Ltd and Sensex
points (closing values)

12/25/2008
Mahindra and Mahindra Ltd
JITENDER SINGH
Acknowledgement

The completion and submission of this project would have not


been possible without the help of my friends and the source of
my project like net and some books. The topic encouraged me
to go through it as it is the one of the latest one and find out
some special things before Miss Maninder Kaur.

Jitender Singh
R346A13
3020070064

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INDEX
S.NO. PARTICULARS Page. No.
1. History 4
2. Company’s profile 5
3. Company’s Business 6-7
4. Company’s Product 8
6. Company’s Group 9
7. Company’s Quantitative Analysis 10-17
Biblography

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Introduction
HISTORY
Mahindra & Mahindra Limited is part of the US $6.7 billion Mahindra
Group, an automotive, farm equipment, financial services, trade and
logistics, automotive components, after-market, IT and infrastructure
conglomerate. The company was set up in 1945 as Mahindra &
Mohammed. Later, after the partition of India, Ghulam Mohammad
returned to Pakistan and became that nation's first finance minister.
Hence, the name was changed from Mahindra & Mohammed to
Mahindra & Mahindra in 1948.
Initially set up to manufacture general-purpose utility vehicles, Mahindra
& Mahindra (M&M) was first known for assembly of the iconic Jeep in
India. The company later branched out into manufacture of light
commercial vehicles (LCVs) and agricultural tractors, rapidly growing
from being a manufacturer of army vehicles and tractors to an
automobile major with a growing global market. At present, M&M is the
leader in the utility vehicle (UV) segment in India with its flagship UV, the
Scorpio (known as the Mahindra Goa in Italy).
M&M is India's largest SUV maker.

Profile of Mahindra & Mahindra Limited


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Mahindra & Mahindra Limited

Type Conglomerate

Founded 1945

Headquarters Mumbai, India

Keshub Mahindra (Chairman), Anand


Key people G.Mahindra (Vice-Chairman &
Managing Director)

Industry Automotive

Revenue US$ 6.7 billion (2008)

Employees 65,000 plus

Website www.mahindra.com/

BUSINESS
Mahindra & Mahindra grew from being a maker of army vehicles to a
major automobile and tractor manufacturer. It has acquired plants in

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China and the United Kingdom, and has three assembly plants in the
USA. M&M has partnerships with international companies like Renault
SA, France and International Truck and Engine Corporation, USA.
M&M has a global presence and its products are exported to several
countries. Its global subsidiaries include Mahindra Europe Srl. based in
Italy. Mahindra USA Inc., Mahindra South Africa and Mahindra (China)
Tractor Co. Ltd.
M&M is the third largest tractor company in the world. It is also the
largest manufacturer of tractors in India with sustained market
leadership of around 25 years. It designs, develops, manufactures and
markets tractors as well as farm implements. Mahindra (China) Tractor
Co. Ltd. manufactures tractors for the growing Chinese market and is a
hub for tractor exports to the USA and other western nations. M&M has
a 100% subsidiary, Mahindra USA, which assembles products for the
American market.
M&M made its entry into the passenger car segment with the Logan in
April 2007 under the Mahindra Renault joint venture. M&M will make its
maiden entry into the heavy trucks segment with Mahindra International,
the joint venture with International Truck, USA.
M&M's automotive division makes a wide range of vehicles including
MUVs, LCVs and three wheelers. It offers over 20 models including new
generation multi-utility vehicles like the Scorpio and the Bolero.
At the recent Delhi Auto Show, Mahindra executives said the company
is pursuing an aggressive product expansion program that will see the
launch of several new platforms and vehicles over the next three years,
including an entry-level SUV designed to seat five passengers and
powered by a small turbo diesel engine. Later in 2008, it will unveil the
all-new Ingenio SUV, which will be joined in 2009 by a pickup derivative.
In early 2008, Mahindra commenced its first overseas CKD operations
with the launch of the Mahindra Scorpio in Egypt, in partnership with the
Bavarian Auto Group. This was soon followed by assembly facilities in
Brazil. Vehicles assembled at the Plant in Bramont, Manaus, include
Scorpio Pik Ups in single and double cab pick-up body styles as well as
sports utility.
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The US based Reputation Institute recently ranked Mahindra among the
top 10 Indian companies in its 'Global 200: The World's Best Corporate
Reputations' list.
Mahindra is also gearing up to sell the Scorpio SUV and pickup next
year in North America, through an independent distributor, Global
Vehicles USA, based in Alpharetta, Georgia.
AWARDS
1. Bombay Chamber Good Corporate Citizen Award for 2006-07
2. Deming Application Prize
3. Japan Quality Medal in 2007
4. Business world FICCI-SEDF Corporate Social responsibility Award
2007

Products
MODELS
• Mahindra Thar

• Mahindra Bolero
○ Mahindra Bolero Camper
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○ Mahindra Bolero Inspira
○ Mahindra Bolero Stinger Concept
• Mahindra Scorpio
○ Mahindra Scorpio Getaway
○ Mahindra Scorpio First
• Mahindra Legend
• Mahindra-Renault Logan (in cooperation with Renault)
• Mahindra Axe
• Mahindra Major
○ Mahindra Souvenir Concept
• Mahindra Commander
• Mahindra Cab Chassis

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MAHINDRA GROUP
Core Business Activities
• Automotive
• Farm Equipment
• Systech
• Trade & Financial Service
• Information Technology
• Infrastructure Development
Community Initiatives
• Mahindra United World College of India
• Mahindra United, a football club based in Mumbai, Maharashtra
• Mahindra Foundation
• K. C. Mahindra Education Trust: Nanhi Kale

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Quantitative Technique Analysis

The value of M&M Ltd and Sensex fromDecember 01,2007 to


November 30, 2008
M&M Ltd.(BSE
Date closing) Sensex (BSE closing)
Monday, December 03, 2007 750.9 19,363.19
Tuesday, December 04, 2007 771.85 19,603.41
Wednesday, December 05, 2007 773.7 19,529.50
Thursday, December 06, 2007 784.6 19,738.07
Friday, December 07, 2007 780 19,795.87
Monday, December 10, 2007 776.1 19,966.00
Tuesday, December 11, 2007 782.8 19,930.68
Wednesday, December 12, 2007 787.8 20,290.89

Measures of share price of M&M Ltd


and Sensex
M&M Ltd. Sensex
Mean 593.16 15321.58
Median 592.9 15422.31
Mode 658.65
Quartile deviation 533.77 13742.03
(Q1)
Quartile deviation 667.77 17363.27
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(Q3)
Standard deviation 127.6 3056.46
Skewnees -0.4524 -0.353
Kurtosis 0.348 -0.281
Correlation(Pearson) 0.09545
Regression equation
Intercept 1759.83 -17.38
Slope 0.0398 22.86
Covariance 370732.72

Interpretation:
Mean: It is used to find a value which can represent the whole set of
data.
Mean = (X1 + X2 + X3 + …………………………+ Xn)/n
Mean of share price of M&M Ltdis 593.16 which show that the average
price of shares of the company for last one year is RS 593.16 It helps us
to compare the average value of the whole data with next year data.
M&M Ltd Sensex

Mean 593.16 15321.59

Median: The median is that point in a distribution above and below


which are 50% of the scores; in other words, the median is the midpoint.
If there are an odd number of scores, the median is the middle score. If
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there is an even number of scores, the median is the point halfway
between the two middle scores.
In other words, we can say that median divide the distribution in two
equal parts.

M&M Ltd Sensex


Median 592.9 15422.31

Median of M&M Ltd. shows that half of the share prices of company is
below 592.9 and half are above. Similarly Sensex value shows that in
last one year the middle price of Sensex is 15422.31.

Mode: It is the most frequently occurring number in a group of


numbers.

M&M Ltd. Sensex


Mode 658.65

Value 658.65 shows that for M&M Ltd the most number of repeated
share prices is Rs 658.65.

Quartile: Returns the quartile of a data set. Quartiles often are used
in sales and survey data to divide data into groups. For example, we
can use QUARTILE to find the top 25 percent of incomes in a
population.

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Quartile deviation M&M Ltd Sensex
Lower quartile (Q1) 533.77 13742.03
Upper quartile (Q3) 667.77 17363.27

Lower quartile of the M&M Ltd. is 533.77 which show that


out of total values 25 % of the share prices of the company lies before
this value. This helps us to calculate the 25th percentile of the company’s
share price in last one year. Whereas for Sensex it is 13742.03 which
similarly tell us that 25 percent of the total values are below this.
Upper Quartile of the M&M Ltd is 667.77 which tell us that of
the total number of values of the last years share prices 75 % lies before
this. This helps us to divide the whole data into the area which consists
of the 75% of the data.

Standard Deviation:
The standard deviation is a measure of how widely values are dispersed
from the average value (the mean).

M&M Ltd Sensex


Standard 127.60 3056.46
deviation

The high Standard deviation of the company and Sensex shows that
during last one year the fluctuation of share prices are very high and the
stocks volatility is also very high. This shows that in current situation the
shares of M&M Ltd are less trust worthy.

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Variance: =
Where ‘x’ is the sample mean AVERAGE
(number1, number2…) and n is the sample
size.

M&M Ltd Sensex

Variance 16281.66 9341951.828

It measures the variability of the data from its mean, variance of


M&M Ltd, which is high and shows that square of the deviation in the
share price of the company from the middle value is high.

Covariance:
The covariance is:

Where x and y are the sample means and n is the sample size.

Covariance 370732.7267

It measures how the share price of M&M Ltd and the points of Sensex
vary simultaneously. The value of covariance is very high which means
the share price of M&M Ltd and Sensex deviate simultaneously.

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Skewnees: Skewnees characterizes the degree of asymmetry of a
distribution around its mean. Positive Skewnees indicates a distribution
with an asymmetric tail extending toward more positive values. Negative
Skewnees indicates a distribution with an asymmetric tail extending
toward more negative values.

Skewness =

M&M Ltd Sensex


Skewness -0.4254 -0.353

Negative skewness of M&M Ltd shows that values distribution are more
towards the negative side of mean i.e. more values are less than the
mean of the share price.

Kurtosis: Kurtosis characterizes the relative peakedness or


flatness of a distribution compared with the normal distribution. Positive
kurtosis indicates a relatively peaked distribution. Negative kurtosis
indicates a relatively flat distribution.

M&M Ltd Sensex


Kurtosis 0.348 -0.282

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Positive Kurtosis of M&M Ltd shows that the distribution curve of the
share prices of the company is having more peakedness than the
normal distribution curve. Whereas the negative value of the Sensex
shows that the peakedness in its distribution curve is less than normal
distribution curve.

Correlation: It helps to determine the relationship between two


properties. It measures the extent of relationship between the stock
market index return and the stock return in a particular period.
Pearson coefficient of 0.9545
correlation

As the correlation between the shares prices of the M&M Ltd and
Sensex is 0.9545, which is positive hence it shows the high positive
relation between the company and the Sensex. This means that both
M&M Ltd and Sensex are related enough that Sensex can explain the
movements of share prices of M&M Ltd. This means that if prices at
Sensex falls this can intimate that prices of M&M Ltd will also Fall.

Regression: It is used to check the dependency of one variable on


the other. It shows the change in dependent variable with change in
independent variable. In this case, the value of share price of M&M Ltd
is depending upon the Sensex value.
So, we only find the regression equation of share price of M&M Ltd on
Sensex.
Let us suppose X denotes the share price of M&M Ltd and Y denotes
value of Sensex.
The general, regression equation of X on Y; X-x=bxy (Y-y)
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Where “x” is arithmetic mean of M&M Ltd share prices and “y” is
arithmetic mean of Sensex valves.

Regression equation of
M&M Ltd share price on X=0.387Y- 5376.29
Sensex

Trend Line: Returns values along a linear trend. It fits a straight line
(using the method of least squares) to the arrays known _y's and
known_x's. It Returns the y-values along that line for the array of
new_x's that you specify.
Trend line for M&M Ltd share price (BSE closing)

Above trend line of the M&M Ltd. shows that from last one year the
share price of the company is falling and it is falling with the same
pattern i.e. both the side of the trend line have equal data.

Trend line of Sensex:

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Above trend line of the Sensex shows that from last one year the share
price of the company is falling and it is falling with the same pattern i.e.
both the side of the trend line have equal data.

Bibliography:
www.google.com

www.wikipedia.com

www.mahindraltd.com

www.yahoofinance.com

www.economictimes.com

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