Determinants of Equity Share Prices in The Indian Corporate Sector

Determinants Of Equity Share Prices: An Empirical Study
A RESEARCH PROJECT ON
DETERMINANTS OF EQUITY SHARE PRICES IN THE INDIAN CORPORATE SECTOR : AN EMPIRICAL

STUDY
A Report Submitted in partial fulfillment for the award of
MASTERS IN BUSINESS ADMINISTRATION

For Bangalore University Submitted by
RAKESH D
REG NO: 04XQCM6070 UNDER THE GUIDANCE OF Prof. B V RUDRAMURTHY
M.P.BIRLA INSTITUTE OF MANAGEMENT Associate, Bharatiya Vidya Bhavan #43.RACE COURSE

ROAD, BANGALORE-560001
Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore
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DECLARATION & CERTIFICATES
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DECLARATION
I hereby declare that this dissertation entitled “Determinants of Equity Share

Prices in the Indian Corporate Sector: an Empirical Study” is the result of my own
research work carried out under the guidance and supervision of Prof. Dr T V
Narasimha Rao, M P Birla Institute of Management Bangalore.
I further declare that this dissertation has not been submitted earlier to any
Institute/organization for the award of any degree or diploma.
Place: Bangalore Date: RAKESH D
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PRINCIPAL’S CERTIFICATE
I hereby certify that this dissertation entitled “Determinants Of Equity Share

Prices In The Indian Corporate Sector : An Empirical Study” is the result of
research work carried out by Mr. Rakesh D bearing the Reg no. 05XQCM6070 under the
guidance of Prof. Dr T V Narasimha Rao, M P Birla Institute of Management,
Bangalore.
Place: Bangalore Date: Dr N.S. MALAVALLI Principal
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GUIDE’S CERTIFICATE
I hereby certify that project work embodied in the dissertation entitled

“Determinants Of Equity Share Prices In The Indian Corporate Sector: An Empirical
Study” is the result of research undertaken and completed by Mr. RAKESH D bearing
the Reg no. 05XQCM6070 under my guidance and supervision.
Place: Bangalore Date: Prof. Dr: T. V. N RAO
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ACKNOWLEDGEMENT
In these two months I have worked on it & I feel indebted to many and extend my
heartful gratitude and profusely thank those people who not only gave assistance to
me but also participated in the making of this project. First and foremost I would
like to express my sincere gratitude to my research guide Prof. Dr: T. V. NARASIMHA
RAO, Adjunct Faculty, M.P.Birla Institute of Management, Bangalore for his constant
encouragement and guidance in the course of the research investigation.
Further, I would also like to thank all the faculty members of MPBIM who have
helped me in completing my project. I have gained a lot of knowledge throughout the
course of carrying out this project.
I would like to sincerely thank my Parents and all my Friends who have helped me in
completing this project by providing me with the psychological and academic
support.
RAKESH D (Reg No. 05XQCM6070)
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INDEX CONTENT PAGE NO EXECUTIVE SUMMARY…………………………………………..10 CHAPTER 1: INTRODUCTION

& THEORETICAL BACKGROUND 1.1 Introduction…………………………………………………11 1.2 Evolution
……………………………………………………13 1.3 Other leading Indian Stock Exchange operations……......14
1.4Security analysis……………………………………………..15 1.5 Financial
Analysis…………………………………………..15 1.6Macroeconomic analysis………………………………….…20 1.7Industry
analysis…………………………………………….22 CHAPTER 2: LITERATURE REVIEW 2.1 Paper 1 Determinants
of equity share prices in the Indian Corporate sector…………………………………………24 2.2 Paper 2
Determinants of stock prices in India………….….29 2.3 Paper 3 Determinants of equity
prices: a study of select Indian companies………………………….……………...31 2.4 Problem
Statement……………………………………….….37 CHAPTER 3: RESEARCH METHODOLOGY 3.1 Objectives and
Scope of Study ……………………………...38 3.2 Sample and Period of Study ………………………………...39
3.3 Sources of Data ………………………………………….…...40 3.4 Period of Data …………………………………………….
….40 3.5 Statistical Procedure …………………………………….…..41 3.6 Variables Used In
Determining the Equity Share Price …..41 3.7 Limitations of the study
……………………………………..44 CHAPTER 4: ANALYSIS OF DATA & INTERPRETATION OF RESULTS 4.1
Descriptive Analysis ……………………………………….….50 4.2 Correlation Matricies & Regression
Tables……....................60 4.4 Interpretation of Results………………………………………88
CHAPTER 5: CONCLUSION ………………………………………….90
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CHAPTER 6: BIBILOGRAPHY & ANNEXURES………….…….92 Table 1: list of sectors included in

study in Paper 1……………..…25 Table 2 list of industries selected for this
study…………………..…39 Table 3 interpretation of results year wise ……………………........88
Table 4 interpretation of results industry wise……………………...89 Table 5 list of
companies included in the study………………….....95 Table 6 no of sectors and companies
included in the study……......96
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EXECUTIVE SUMMARY
Share price is the most important indicator which is readily available to the
investors for their decision to invest or not to invest in a particular share.
Financial theories suggests that share price changes are associated with changes in
fundamental variables which are relevant for share valuation like payout ratio,
dividend yield, capital structure, earnings, size of the firm and its growth.
However the actual fundamental factors found to be relevant may vary from market to
market. The study examines the empirical relationship of explanatory variables
namely dividend payout, earnings per share, book value equity and reserves and
surplus, price earnings ratio, return on capital employed and growth on the market
price of the shares. The relationship between independent variables of 87 companies
is studied over a period of 5 years from 2002 to 2006. The result revealed that
Earnings Per Share the only determinant which is common in both the analysis (year
wise and industry wise). Therefore EPS is an important determinant of share price.
If we look particularly into the year wise analysis- Book value also influences in
the dependent variable i.e. share price. And looking into industry wise it is found
that Price earning ratio also influences significantly on the dependent variable.
The other independent variables like Return on capital employed and dividend per
share remain insignificant but with a positive value. They are not significant
determinants of share price. The regression analysis clearly depicts that Growth
and payout remains most insignificant determinant with negative value. They do not
have any influence on the share price. Overall the R2 ranges from 13 % to 56 %
(except for automobile industry). It means less than 50 % of variation in dependent
variable is explained by these independent variables. Finally it can be concluded
that apart from the above variables there are some other factors which influences
the share price. Those factors may be macroeconomic factors like government policy,
federal bank policy, central bank interest rates, business cycle, demand and supply
shocks, GDP, inflation, exchange rates. Etc.
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CHAPTER I
INTRODUCTION
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INTRODUCTION
The literature on fundamental analysis on valuing stocks is perhaps one of the
earliest developments in the literature on security analysis. It perhaps sought to
find an answer to the age-old adage — ‘What explains stock prices?’ However,
various limitations of the models used in fundamental analysis led to the
development of various alternative valuation models. Share price is the most
important factor readily available to the investors for their decision to invest
not in a particular share. Theories suggest that shire price changes are associated
with changes in fundamental variables with changes in valuation like payout ratio,
dividend yield, capital structure, earnings, size of the firm and its growth.
Investigations of share price changes appear to yield evidence that change in
fundamentals variable(s) should jointly bring about changes in share prices both in
developed and emerging markets. However the actual fundamental factors found to be
relevant may vary from market to market. The changes in asset growth of firms are
significant in case of Japanese shares while earnings appear to be universally a
relevant factor. However, it is widely agreed that a set of fundamental variables
as, suggested by individual theories is no doubt relevant as possible factors
affecting share prices changes in the short and the long run Knowledge of relative
influence of fundamental factors on equity share prices is helpful to corporate,
management, government and investors. To the corporate management an understanding
of the valuation mechanism in stock market is essential for the sound financial
management of the company. An understanding of determinants of share prices is
useful to dividend payment, bonus declaration, right issues, etc. Investors can
also form better judgments and make intelligent and rational investment decisions.
Investors in shares usually make constant use of these various variables (or
gauging the relative merit of a script. These calculations are in no sense, final
determinants of equality and value but they are convenient indicators about the
performance of equity shares.
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Determinants Of Equity Share Prices: An Empirical Study Due to liberalization,
privatization and globalization, Indian capital market has witnessed considerable
changes in 1990s and 2000s. As a consequence, the relative importance of the
variables determining the share prices has also undergone some changes. All these
developments have increased the importance of striving towards the basic goals of
financial management i.e., maximizing the price of firm’s common stock and
therefore shareholders wealth. For a firm whose equity shares are actively traded
on the stock market the wealth of equity shareholder is reflected in its marker
value. Hence, the goal of financial management for such firms should be to maximize
the market value of equity shares. The decade of 1990s i.e., post reforms era has
witnessed radical changes in public policies in India that can be expected to have
an effect on the environment within which firms operate. The financial sector also
experienced deregulatory initiatives in the form of unfreezing of interest rare
controls and public policy initiatives to encourage the growth of financial markets
—for both equity and debt (bonds) instruments. Decisions located within the
boundaries of the firm therefore, play a greater role in driving the equity share
prices, under the new policy regime. Financial management in any company is largely
concerned with two main functions: Procurement of funds and utilization of funds.
There are three major decision areas in any decisions and the dividend decisions.
While procurement of funds is largely the result of financing decisions,
utilization of funds is the result of investment decisions. Investment is the
economic decision of committing a set of fixed monetary resources with the
expectation of receiving a stream of returns over a reasonable long period of time
in the future. Since the decision to invest in securities is revocable, investment
ends are momentary and investment environment is fluctuating, the reliable bases
for reasoned expectation become more and more ambiguous as one envisages of the
distant future. Investment is concerned with the purchase and sale of financial
assets and an attempt of the investor to make logical decisions about the various
alternatives in order to earn suitable return. The investor has various alternative
options for investing savings to flow in accordance with his preference. Savings
are generally flown into investment with an
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Determinants Of Equity Share Prices: An Empirical Study expectation of return, but
savings kept as cash are unproductive (i.e., they do not earn any reward). Savings
arc invested into return yielding assets depending on their risk and return
characteristics.
EVOLUTION
Indian Stock Markets are one of the oldest in Asia. Its history dates back to
nearly 200 years ago. The earliest records of security dealings in India are meager
and obscure. The East India Company was the dominant institution in those days and
business in its loan securities used to be transacted towards the close of the
eighteenth century. By 1830, business on corporate stocks and shares in Bank and
Cotton presses took place in Bombay. Though the trading list was broader in 1839,
there were only half a dozen brokers recognized by banks and merchants during 1840
and 1850. The 1850 witnessed a rapid development of commercial enterprise,
brokerage business attracted many men into the field, and by 1860, the number of
brokers increased into 60. In 1860-61 the American Civil War broke out and cotton
supply from United States of Europe was stopped; thus, the 'Share Mania' in India
begun. The number of brokers increased to about 200 to 250. However, at the end of
the American Civil War, in 1865, a disastrous slump began (for example, Bank of
Bombay Share, which had touched Rs 2850, could only be sold at Rs. 87). At the end
of the American Civil War, the brokers who thrived out of Civil War in 1874, found
a place in a street (now appropriately called as Dalal Street) where they would
conveniently assemble and transact business. In 1887, they formally established in
Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively
known as .The Stock Exchange "). In 1895, the Stock Exchange acquired a premise in
the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay
was consolidated.
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Determinants Of Equity Share Prices: An Empirical Study OTHER LEADING CITIES IN
STOCK MARKET OPERATIONS Ahmedabad gained importance next to Bombay with respect to
cotton textile industry. After 1880, many mills originated from Ahmedabad and
rapidly forged ahead. As new mills were floated, the need for a Stock Exchange at
Ahmedabad was realized and in 1894, the brokers formed "The Ahmedabad Share and
Stock Brokers' Association". The cotton textile industry was to Bombay and
Ahmedabad, the jute industry was to Calcutta. In addition, tea and coal industries
were the other major industrial groups in Calcutta. After the Share Mania in 1861-
65, in the 1870's there was a sharp boom in jute shares, which was followed by a
boom in tea shares in the 1880's and 1890's; and a coal boom between 1904 and 1908.
On June 1908, some leading brokers formed "The Calcutta Stock Exchange
Association". In the beginning of the twentieth century, the industrial revolution
was on the way in India with the Swadeshi Movement; and with the inauguration of
the Tata Iron and Steel Company Limited in 1907, an important stage in industrial
advancement under Indian enterprise was reached. In 1920, the then demure city of
Madras had the maiden thrill of a stock exchange functioning in its midst, under
the name and style of "The Madras Stock Exchange" with 100 members. However, when
boom faded, the number of members stood reduced from 100 to three, by 1923, and so
it went out of existence. In 1935, the stock market activity improved, especially
in South India where there was a rapid increase in the number of textile mills and
many plantation companies were floated. In 1937, a stock exchange was once again
organized in Madras - Madras Stock Exchange Association (Pvt) Limited. Lahore Stock
Exchange was formed in 1934 and it had a brief life. It was merged with the Punjab
Stock Exchange Limited, which was incorporated in 1936.
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SECURITY ANALYSIS
FINANCIAL ANALYSIS The most important quality for financial analysis is the passion
to go for, go into and go beyond numbers. Let us begin by unlearning some common
misconceptions. Many people relate financial analysis to number crunching. There
are some others who have set benchmarks for financial ratios and numbers, like a
current ratio of 2 or debt to equity ratio of 1, etc. Many have a tendency to
calculate expected share price by multiplying EPS with a normative P/E. Were
financial analysis such simple arithmetic, we would have given you a spreadsheet
with pre-written formulae rather than this verbose piece. You have some acquired
knowledge and techniques and then it is all upon your judgment and experience. Yes,
numbers are important. Financial analysis starts with numbers. But it does not end
there. Ratio A ratio is nothing more than a simple division of two numbers. Often
numbers by themselves do not convey anything until they are related. In financial
analysis, we need qualitative information and try to read between the numbers. We
have to ask all the right questions. Over the years, there are some ratios, which
have become more popular and handy for rule of thumb analysis of financial
statements. Our purpose in this note is not deride them but to advice the reader to
use them properly to derive the correct results. Key Objectives of a Business
Before you look at different ratios, let us look at a firm's objectives in a
capitalist market. The one and only intention of any firm is to maximize
shareholders value, which is effectively done by getting a bigger bang out of the
capital employed. Exceptional cases like charity, passion, hobbies, etc also try to
maximize return on capital employed, but there the definition of capital is
different. For the time being, let us stick to financial capital. While businesses
claim to have multiple objectives such as market share, brand building and even
social objectives, at the end of the day, what really matters is how Rakesh D, MBA
2005-07,M.P Birla Institute Of Management, Bangalore - 15-
Determinants Of Equity Share Prices: An Empirical Study much money one makes. All
are strategies to maximize return on capital employed, which is the one and only
long term goal of all management. Obviously one will look at money made in relation
to one's investment. If you use 10 times as much capital and make 5 times more
money, it is of no good. If business A earns Rs10 on Rs 100 investment (10%), it is
better than another business B that earns Rs50 on Rs1000 (5%). To analyze the
performance of any business, the key ratio is therefore Return on Capital Employed
(ROCE). We can further analyze this ratio using models popularly know as The DuPont
model. The model starts with analysis of ROCE in its two constituents
• Profit margin on sales • Sales per unit of capital invested
To give an example, say business A is one in which Rs100 capital invested in a year
generates sales of Rs100 with net profit margin of 10%. Whereas, in business B
Rs100 investment generates a turnover of Rs500 but with a net profit margin of only
4%. As you can see, in business B, net profit margin can be lower but is more than
compensated by the fact that turnover generated per unit of capital invested is
significance higher or capital turnover ratio is higher. Return on capital invested
is the product of sales margin and capital turnover ratio. The same can be
presented in the formula as follows. (Net profit/ sales) * (sales/ capital
employed) = Return on capital employed Profit Margin. We all know that profit is
revenue minus cost. Each element of cost can be presented as a % of revenue and at
different levels of costs; we have different versions of profit, i.e. EBIDTA, EBIT,
EBT, etc. EBITDA margin is a good indicator of operational efficiency of any
company.
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Determinants Of Equity Share Prices: An Empirical Study Even revenue can be broken
up for the purpose of analysis, which is of use in a multi product, multi division
entity. Typically, analysts look at the relative share of other income, because
this item is where most Indian companies show extra ordinary profits to boost their
bottom line. Return Ratios There are two types of providers of capital, owners and
lenders. As returns to lenders are fixed, we don't have to calculate any return
ratio on debt, as the same is predetermined. From owners' perspective, the key
ratio is return on net worth. Net worth represents owners' funds, paid up capital
and retained profits called as reserves. As an owner, you would also be interested
in knowing how much return is being generated by the total capital employed.
Capital employed consists of net worth plus debt, i.e. owned and owed money. So
when we calculate this ratio we have to add back the cost of debt, i.e. adjust for
interest expenses. This ratio is calculated primarily on pre-tax basis and it is
equivalent to EBIT (Earnings before Interest and Tax) divided by total capital
employed. If we want to calculate it on post-tax basis, we will have to add
interest adjusted for tax i.e. EBT + interest*(1-T)/ capital employed, where T is
the tax rate. Add Back Interest for ROCE Because, while calculating ROCE, we have
to add back interest. This ratio calculates the returns to all the providers of
capital. As mentioned earlier, capital can be debt or equity. On debt, we pay
interest while entire PAT belongs to equity holders. Therefore, when we calculate
return on capital employed, we have to do so before any payment is made to the
providers of capital. So if we do not add back interest we will be taking profits
after making some payment to the provider of capital thereby distorting the real
picture. Per Share Ratios An equity share is a legal document representing
ownership of any entity. Shares of listed companies trade in stock markets. It
therefore makes sense to look at most profitability indicators on a per share
basis. The key ratio is earnings per share which is net profit (if
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Determinants Of Equity Share Prices: An Empirical Study the company has issued
preference capital, then one must remove preference dividend to reflect what
belongs to the common equity holders only) divided by number of outstanding shares.
One variant of this ratio of cash earnings per share, which is cash, profited
divided by number of outstanding shares. Cash profit is equivalent to profit after
tax plus depreciation and other non-cash charges. In stock market, a fraction of
ownership known as shares is traded. Therefore in order to arrive or get a proper
picture of the worth of a share (one unit of the company), we should look at
numbers calculated on a per share basis. Earnings per share are profit after tax
(adjusted for preference dividend if any) divided by number of outstanding shares.
Similarly, you can calculate cash profit per share, sales per share, etc. This will
facilitate valuation and comparison with other companies. The most famous of the
valuation ratios is the Price earnings ratio (P/E ratio), which the current market
is priced of the share divided by the earnings per share. Dividend per share The
owner can allow profits to remain within business or can withdraw it for other or
his personal use. When he withdraws, it is analogous to dividend payout. In a
company, the management decides on behalf of the owner, whether or not to retain a
part of profits within the company (that is called retained earnings) and gives
back a part of profits to the owners called dividends. Dividend per share is the
total dividend paid per equity share. In case there was a fresh issue of equity
capital in the year, most companies make pro rata payment, i.e. supposing in a
financial year (April to March) there was an issue of equity shares on October 1.
The new shares, which were issued on Oct 1, will be entitled for only 50% dividend
as compared to other shareholders who were there for the full year.
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Determinants Of Equity Share Prices: An Empirical Study Trends in Some Key Ratios
By trends we mean progress year after year. So one can look at trends in sales,
fixed assets, working capital and trends in various ratios. Trends in some key
performance ratios such as operating margin, return on net worth also convey
meaningful results. For instance, operating margin that was 8% last year and 9%
this year. Comparison One can make comparisons across years in terms of trends in
margins, growth or comparison across companies within a sector or across a sector,
by comparing large companies in both the sectors and sector aggregates. And firms
of the same industry are compared on various parameters. One can look at aggregate
numbers of one industry and compare them with aggregate numbers of another industry
to understand the differences in performance of various industries. For instance,
if you look at the consumer durable industry which might be generating a return on
networth of 8-10%, whereas software industry may be generating a return on networth
of 40-50%. So one can easily conclude that software industry is doing significantly
better than the consumer durables industry.
MACROECONOMIC ANALYSIS
To determine the proper price for a firm’s stock, the security analyst must
forecast the dividend and earnings that can be expected from the firm. This is the
heart of fundamental analysis – that is, the analysis of determinants of value such
as earnings prospects. Ultimately, the business success of the firm determines the
dividends it can pay to shareholders and the price it will command in the stock
market. Because the prospects of the firm are tied to those of the broader economy
however, fundamental analysis must consider the business environment in which the
firm operates. For some firms, macroeconomic and industry circumstances might have
a greater influence on profits than the firm’s relative performance within its
industry. In other words, investors need to keep the big economic picture in mind.
Therefore, in analyzing a firm’s prospects it often makes sense to start with the
broad economic environment, examining the state of the aggregate economy and even
the
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Determinants Of Equity Share Prices: An Empirical Study international economy. From
there, one considers the implications of the outside environment on the industry in
which the firm operates. Finally, the firm position within the industry is
examined.
Following are some International factors relevant to firm’s performance:

The Global Economy The top down analysis of a firm’s prospects must start with the
global economy. The international economy might affect a firm’ exports prospects,
the price competition it faces from competitors, or the profits it makes on
investments abroad. Certainly, despite the fact that the economies of most
countries are linked in a global macro economy, there is considerable variation in
the economic performance across countries at any time. It includes factors like
growth rates of respective nations, currency exchange rate, global industrial
output etc. The Domestic Macro Economy The macroeconomy is the environment in which
all firms operate. The importance of macroeconomy is determining investment
performance to forecasts earnings per share. It includes Gross Domestic Product,
Employment, Inflation, Interest rates, Budget Deficit, etc Demand And Supply Shocks
A demand shock is an event that affects the demand for goods and services in the
economy. Examples of positive demand shock are reduction in tax rates, increase in
money supply, increases in government spending or increases in foreign export
demand. A supply shock is an event that influences production capacity and costs.
Examples of supply shocks are changes in the prices of imported oil; freezes,
floods, or droughts that might destroy large quantities of agricultural crops;
changes in educational level of economy’s workforce; or changes in the wage rate at
which the labor force is willing to work.
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Determinants Of Equity Share Prices: An Empirical Study Federal Government Policy
As previous section would suggest, the government has two broad classes of macro
economic tools- those that affect the demand for goods and services and those that
affect the supply. However issues such as government spending, tax levels, monetary
policy, national policies on education, infrastructure (such as communication and
transportation system), research and development also are properly regarded as part
of macroeconomic policy. Business Cycles The economy recurrently experiences
periods of expansion and contraction, although length and breadth of those cycles
can be irregular. This recurring pattern of recession and recovery is called
business cycle. As economy passes through different stages of business cycle,
relative performance of different industry groups might be expected to vary.
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INDUSTRY ANALYSIS
Industry analysis is important for the same reason that macroeconomic analysis. Is
not surprisingly, industry group exhibits considerable dispersion in their stock
market performance. Even small investors can easily take positions in industry
performance by using mutual funds with an industry focus. Defining an industry
Although we know what we mean by an “industry” it can be difficult in practice to
decide where to draw the in between one industry and other. Consider for example
the financial industry the forecast for 2002 growth in industry earnings per share
was 16.7%, but the financial “industry” contains firms with widely differing
products and prospects. Several industry classifications are provided by many
analysts for example Standard & Poor. Sensitive to the business cycle Once analyst
forecast the state of macro economic it is necessary to determine the implication
of that forecast for specific industries. Not all industries are equally sensitive
to the business cycle. For example the cigarette industry is largely independent of
the business cycle demand for cigarette doesn’t seem effected by the state of the
macroeconomy in a meaningful way. It is a matter of habit in contrast, are
automobile production is highly volatile. In recession, customers can prolong the
lives of their cars until their income is higher. Three factors will determine the
sensitivity of a firms earnings to the business cycle. • • • Sensitivity of sales
Degree of operating leverage Financial average
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CHAPTER II
LITERATURE REVIEW
& PROBLEM IDENTIFICATION
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REVIEW OF LITERATURE
A number of empirical studies have been conducted in India and abroad on
relationship between market price of shares and explanatory variables namely,
dividend per share, earnings per share, book value per share, size, cover, return
on capital employed and payout ratio.
PAPER I: DETERMIINANTS OF EQUITY SHARE PRICES IN THE INDIAN CORPORATE SECTOR:

Shefali Sharma and Balawinder Singh
This study examines the empirical relationship of explanatory variables namely,
dividend per share, earnings per share, book value per share, size, cover, return
on capital employed and payout ratio on the market price of shares in the post
reform era. The relationship between independent and dependent variables of 160
companies is studied over a period of five years spanning from 2001 to 2005. The
results reveal that earnings per share and book value per share are important
determinants of share price as they are indices healthy financial position of
companies. Dividend per share is the important indicator of share price which shows
that the companies should adopt a liberal dividend policy to activate the primary
as well as secondary market. A high dividend rate may also help in increasing the
market price and result in high capital appreciation to share holders as depicted
by the payout ratio and cover. Price ratio investor reflects investor expectations
of growth in a firm’s earnings that vary from industry to industry.
Database and Research Methodology

The present study deals with fundamental analysis of share valuation as it focuses
on factors relating to company. This section explains in detail the objectives,
period, sample and database of the study.
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Sample and Period of Study

The data employed in the study relates to manufacturing sector of companies listed
on Bombay Stock Exchange. 160 companies covering the following industries have been
finally selected for the purpose of the study Table 1 Industry General Engineering
Cotton Textile Chemical Iron and Steel Electrical Miscellaneous Total No. of
Companies 28 23 33 26 28 22 160
While selecting the sample of the companies from six industries, the following
criteria is adopted The necessary financial data required lot calculating the
measures of dependent and independent variable pertaining to all the years 2001-
2005 is available. The companies did not skip dividend for any two successive years
are included the sample The companies whose average earnings per share of any three
successive years are not zero or negative is also considered. Further only those
companies whose price data is available are retained in the sample size. The listed
shares on Bombay Stock Exchange are considered.
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Regression model
The linear multiple regression model has been applied primarily to minimize the
problem of multicollinearity. This technique of multivariate analysis was selected
because it is the most appropriate tool for evaluating the individual and combined
effect of a set of independent variables on dependent variables. The significance
of the coefficient of a set of independent variables was tested at 1% and 5% by
computing t-values. To determine the proportion of explained variation in dependent
variable, coefficient of multiple determination (R2) was worked out. The overall
significance of regression equation was tested with the help F-values.
Company Performance Variables and equity share prices

Share Price (SP) The forces of demand and supply in the market determine the market
price of the share. SPt = (PH + PL) /2 Where PH is the highest market price, PL is
the lowest market price during the year, which relates to‘t’ period. Book Value
(BV) It is also known as net asset value per share because it measures the amount
of assets, which the corporation has on behalf of each equity share BV shows the
net investment per share made in the business by the share holder. It is calculated
as follows:
Book Value Per Share =
Equity Share Capital + Shareholders Reserves Total no. of Equity Shares Outstanding
Cover (C) It shows the extent to which the dividend per share is protected by the
earnings of the company. Cover has a negative relationship with market price. It is
calculated as follows
Cover = Profits after tax and preference dividend
Dividend - 26-

Determinants Of Equity Share Prices: An Empirical Study Or
Cover = Earnings per share Dividend per share
Dividend Per Share (DPS) It refers to the actual amount of dividend (gross)
declared per share. The net profit after taxes belong to shareholders but the
income that they really receive is the amount of earnings distributed and paid as
cash dividend. The dividends generally influence the share price in positive
direction as depicted by earlier studies.
Dividend Per Share = Total amount (dividend) paid to equity shareholders
Number of Equity Shares Outstanding Earnings Per Share (EPS) The Equity
shareholders are the sole claimants to the net earnings of the corporation after
making payment of dividend to the preference shareholders. The significance of this
ratio flows from the fact that higher the earnings per share the more is the scope
for a higher rate of dividend and also of retained earnings, to build up the inner
strength of the company. Therefore, a higher EPS would increase the market price
and vice versa. It is calculated as follows:
EPS= Net Income after interest, income tax & preference dividend
Numbers of Equity Shares Outstanding
Dividend Payout Ratio (D) Dividend Payout shows the percentage share of the net
profits after taxes and preference dividend paid out as dividend to equity
shareholders. It can be calculated by dividing the total dividend paid to the
equity shareholders by the total profits/ earnings available for them.
Alternatively, it can be found out by dividing DPS by EPS. . This predicts direct
- 27-
Determinants Of Equity Share Prices: An Empirical Study relation between payout
ratio and the price-earning multiple. Conversely it means that there is an inverse
relation between payout ratio and share price changes.
Dividend Payout =
Total Dividend to equity shareholders
* 100
Total Net Profit belonging to Equity shareholders Or = Dividend per share /

Earnings pet share
Price Earning Ratio (P/E) P/E ratio expresses the relationship between the market
price of a company’s share and it5s earnings per share. It indicates the extent to
which the earnings of each share are covered by its price. The ratio helps an
investor to make an approximate calculation of the time required to recover his
investment in a company’s share. The price ratio has a positive relationship with
market price (Dixit, 1986). It was calculated as follows: P/E = Market price per
share * 100 Earnings per share
Return on Capital Employed (ROCE) The return on investment indicates the efficiency
with which a company utilizes funds invested in it. This ratio reveals how well the
resources of a firm are being used, higher the ratio better are the results. The
inter comparison of this ratio determines whether the investments are attractive or
not as the investor would like to invest only where the return is higher. It
generally has positive relationship with marker price of equity share. It is
computed as follows Total Capital Employed = Profit after tax, plus interest * 100
Total Capital Employed
- 28-
Determinants Of Equity Share Prices: An Empirical Study Size (S) The size of the
firm if captured through total capital employed is expected to influence the share
prices positively as large firms are better diversified than small ones and thus
are less risky (Benishy, 1461). Atiase (1985) showed that as the size of the firm
increases, their share price volatility declines. The large size firms are expected
to have higher market values of their shares. For studying the influence of size on
equity share price, size may be measured in terms of total assets, turnover paid up
capital, net worth, sales, number of shares outstanding, etc. The amount of total
assets is taken as a measure of size because it represents the total resources at
the command of the (Sachdeva, VP L994).
Conclusions
The results reveal that Earnings per share and book value per share are the
important determinants of share price as they are an index of the sound financial
position of the companies. Dividend per share is important determinant of the share
price which shows that companies should adopt a liberal dividend policy to activate
the primary as well as secondary market. A high dividend rate may also help in
increasing the market price and result in high capital appreciation to the
shareholders as depicted by payout ratio and cover. Price-earnings ratio too showed
investors expectation about the growth in the firm’s earnings that varied from
industry to industry.
PAPER 2 DETERMINANTS OF STOCK PRICES IN INDIA Subir Sen, Rajkumar Ray

In this paper, an attempt has been made to explore the possibility of explaining
the P/E (Price- Earning Ratio) of Indian stocks it terms of certain key variables
through a decomposition study. The statistical model being used is the well known
as ‘Whitbeck kisor Model’ the feasibility of the model has been tested out on the
variables as used as by the authors (Whitbeck and kisor 1963) i.e. earnings per
share, payout ratio and coefficient of variation in explaining variation in stock
prices. The findings revealed that the dividend payout ratio is by far the single
most important factor affecting stock prices,
- 29-
Determinants Of Equity Share Prices: An Empirical Study followed by earning per
share. Coefficient of variation in earnings per share has a very weak influence on
stock prices.
Research Methodology
This study intends to find a relationship by explaining the P/E of stocks in terms
of certain independent variables with the help of multivariate regression analysis.
After identifying the variables responsible for affecting P/F, a causal
relationship between the dependent and independent variables will he obtained. The
significance of each of the independent variables together with the overall
validity model will he statistically tested. Then we will attempt to find the
difference between a models based on historical growth in earnings per share vis-à-
vis forecasted growth in earnings per share, other variables remaining the same.
The next part will carry out a valuation study to see the robustness of the model,
For the multivariate regression analysis, the following relationship is proposed.
(P/E) =C1 + C2 (EPS) + C3 (DPR) + C4 (CV)+Ui Where, EPS=normalized growth in
earnings per , CV=coefficient of variation in actual earnings per share, Ui
=idiosyncratic error term, CI =autonomous value of P/E if all other variables were
zero, DPR=dividend payout ratio, C2, 03 and 04 are the regression coefficients of
EPS, DPR and OV respectively. Annual growth in EPS is arrived at by regressing the
logarithmic (Ln) values of the actual EPS The slope of the line of best fit
obtained through the scatter diagram shows the normalized’ growth. In the Indian
context, it is very difficult to fix a very rigid time frame for deriving the EPS
growth, mainly because of frequent dilution and / or adjustments in equity, which
indirectly suppresses the EPS growth. To overcome this difficulty we took the
sample time frame in which the growth path had a coefficient of determination (r2)
exceeding 80%. All the 30 stocks fulfilled this criterion. The - 30-

Determinants Of Equity Share Prices: An Empirical Study prospective DPR was
estimated on the ratio of dividend payout in 1999 is actual EPS in the same year.
The coefficient of variation (CV) of historical growth in EPS was calculated by
dividing the standard deviation of EPS by its arithmetic mean, The multivariate
regression analysis carried out with P/E as the dependent variable and the annual
growth in EPS. Dividend Payout Ratio (DPR), and coefficient of variation in EPS as
the independent variables, revealed the following results
Conclusion
In this paper, we have attempted to test the validity of the - Kisor Model” the
Indian context, and as such we did not in any way try to modify the original model.
It is evident from the results of the above study that the P/E Model as proposed by
Whitbeck and Kisor (1963), is valid in the Indian context, though to a much lesser
extent A look at the individual variables revealed that the Dividend Payout Ratio
(DPR) is by far the single most important factor that affects P/E of stocks in
India. Growth in earnings per share (EPS) was also found to he relevant, although
to a much lesser extent. The only parameter that was found to have very little
significance was Coefficient of variation in earnings per share (CV) and it could
have been excluded from the model without affecting its validity to any great
extent.
PAPER 3. DETERMINANTS OF EQUITY PRICES: A STUDY OF SELECT INDIAN COMPANIES Monica

Singhania*
In the last one and a half decades, many emerging capital markets have undergone
drastic changes in terms of market microstructure changes, specifically in
secondary markets. One of the policy concerns is the factors determining equity
prices in markets. The author studies the various determinants of equity share
prices with reference to Indian stock market. The mean values have shown that
during the period 1997 to 2004, the market price was far lower due to various
uncertainties prevailing in the country.
- 31-
Determinants Of Equity Share Prices: An Empirical Study The correlation analysis
shows positive significant (1%) association of only price earnings ratio with
market price. Book value, dividend cover, DPS, EL and growth are positive but
insignificant. At the same time, there is negative insignificant association of
yield with Market Price (MP). While regression analysis depicts that book value,
dividend per share, earnings per share and price earnings ratio are significant
determinants, whereas, dividend cover and yield are insignificant with negative
value. Growth remained insignificant but with positive value. Finally it can be
concluded from correlation and regression analysis that price earnings ratio,
earnings per share, book value and dividend cover are the variables, which
contributed the most in determining share prices followed by dividend per share and
yield.
Research Methodology
The study is based primarily on the data collected from the CMIE (Center for
Monitoring of the Indian Economy) Prowess database. The data for the sample
companies is obtained from CMIE is supplemented with information from various
financial dailies, magazine reports, industry reports, annual reports of the
companies, etc. Sample Selection and Period of the Study The data used in the study
are related to those manufacturing companies listed on the Bombay Stock Exchange
(BSE) for which the data is available in the Prowess database. The analysis is
confined to BSE listed companies only because all the listed companies are required
to follow the norms set by SEBI for financial reporting. Another reason for the
selection was the fact that BSE has the second largest number of domestic quoted
companies on any stock exchange in the world after NYSE, and has more quoted
companies than either the London or the Tokyo stock exchange. The period of the
study is from 1997 to 2004. There are basic reasons behind selection of this period
as period of the study. This period relates to the post-Liberalization era for the
Indian economy which is more relevant for study of corporate behavior. Also, this
is the period for which maximum financial information is available in the database.
- 32-
Statistical Analysis
The data collected relating to the sample companies is analyzed using multiple
regression to study the impact of explanatory variables on equity share prices
(i.e., market price). On the basis of the aforesaid analysis, a suggestive
framework is built which may assist in making future predictions regarding behavior
of market price of equity shares. To achieve the objectives of the research study,
the following relationship of independent variables with dependent variable is
formed: MP =f(BV, DPS, EPS, DC, GH, P/E, DY) Where, MP = Marker Price of Equity
Share, BV = Book Value, DPS = Dividend Per Share, EPS=Earnings Per Share, DC =
Dividend Cover Growth, P/E = Price Earnings Ratio, DY=Dividend Yield. In order to
study the impact of explanatory variables on dependent variable, the following
statistical techniques have been employed: Mean Values: Mean values of the
dependent and independent variables have been computed. The mean values are co with
the values of the ground data of the different variables over the period of study
and to analyze the effect of explanatory variables on the dependent variables.
Standard Deviation Standard deviation of dependent and explanatory variables has
also been computed to examine the variation in various variables from their means
values and also to analyze the consistency and homogeneity in data collection.
- 33-
Determinants Of Equity Share Prices: An Empirical Study Correlation The analysis of
the degree of linear association between various variables used was carried out
with the help of Karl Pearson’s correlation method. The lower the value of ‘r’, the
lower is the degree of linear relationship between the variables. The value of’ ‘r’
needs to be interpreted accurately because a low value of ‘r’ may be due to the
non-linear relationship between these variables. Also the high degree of
correlation does not imply cause and effect relationship between two variables. The
significance of the correlation coefficient is tested with the help of
significance. Regression A linear multiple regression in has been selected to
measure the combined effects of explanatory variables on the dependent variable.
The general form of multiple linear equation is: Y = bo +b1X1+b2X2 +...+bnXn where,
Y X1, X2, X3 bo b1,b2,…… bn = Dependent Variable, = Independent Variables,
=Regression Constant, and = Regression Coefficients of independent variables. t-
test distribution at 1% and 5% level of
The statistical significance of regression coefficients was worked out and tested
by applying ‘t’ test. The coefficient of determination R2 was computed to determine
the percentage variation in the dependent variables. Also with a view to account
for the loss of degree of freedom resulting from the inclusion of additional
explanatory variables, the adjusted R2 was computed. The ‘F’ value was also
computed to test the significance of the R2 with ‘F’ distribution at 1% and 5%
significance level.
- 34-
Determinants Of Equity Share Prices: An Empirical Study Research Design The
interpretation and significance of the variable to a very large extent depends upon
how the various dependent and independent variables are measured. Market Price (MP)
The average price of the share derived from the financial year high and low has
been considered as market price for this study.
MP = High Price + Low Price 2 Where, High Price is Highest market price during the
financial year and Low Price Lowest market price during the financial year
Book Value Per Share (BVPS) BVPS = Reserves + Equity Capital - Revaluation,
Reserves Number of Outstanding Shares (NOS)
Dividend Per Share (DPS) Dividend Per Share (DPS) = Total dividend paid Number of
Outstanding Shares Earnings Per Share (EPS) EPS is defined as the ratio of the
profit after tax of the company for any financial year after payment of preference
dividend if any to the number of shares outstanding as on the last day of the
financial year. Earnings Per Share (EPS) = Net Profit Tax - Preference Dividend
Number of Outstanding Shares (NOS)
- 35-
Determinants Of Equity Share Prices: An Empirical Study . Dividend Cover (DC) It
shows the extent to which the dividend per share is protected by the earnings of
the company DC= EPS DPS Growth (GH) Growth is measured in terms of net sales in the
present study. G= St-St-1 St-1 Where, St = Net sales in the current year and St-1=
Net sales in the immediate previous year
Price to Earnings Ratio (P/E) Using the definition given above of EPS the P/E ratio
is defined as under; P/E Ratio= Marker Price Per Share (MP) Earnings Per Share
(EPS) This ratio enables an investor to make an approximate calculation of the time
required to cover his investment in a company’s stock. Dividend Yield (DY) This is
the return earned by an equity shareholder by way of dividends. Dividend Yield (DY)
is computed as: DYj,t = DPSj,t
X
100
Market pricej,t
- 36-
Determinants Of Equity Share Prices: An Empirical Study Where, DY refers to
dividend yield for company j in year t, DPS refers to dividend per share for
company j in year t, and MP is average price of the sate derived from the financial
year high and low for company.
Summary and Conclusions

The mean values have shown that during the period 1997 to 2004, the market price
was far lower due to various uncertainties prevailing at the time in the country.
The correlation analysis shows positive significant (1%) association of only price
earnings ratio with market price. Book value, dividend cover, DPS, EPS, and growth
rate are positive but insignificant. At the same time there is negative
insignificant association of yield with market price (MP). While regression
analysis depicts that book value, dividend per share, cover and yield are
insignificant with negative value. Finally it can be concluded that from
correlation and regression analysis that price earnings ratio, book value and
dividend cover were the variables which contributed most in determining the share
prices followed by dividend per share and yield.
PROBLEM STATEMENT What are the significant determinants of equity share prices in
the Indian corporate sector? What is the empirical relationship between share
prices and various explanatory variables?
- 37-
Chapter III
RESEARH METHODOLOGY
- 38-
RESEARCH METHODOLOGY
OBJECTIVES AND SCOPE OF STUDY
1. To determine the determinants of equity share prices in Indian corporate sector
2. To examine the empirical relationship between equity share prices and
explanatory variables such as: dividend per share, earnings per share, book value,
payout ratio, price earnings ratio, return on capital employed, growth and market
capitalization(size). 3. To study the significance of above variables in different
industries as well as for grouped data of all these industries.
SAMPLE AND PERIOD OF STUDY

The data employed in the study relates to manufacturing companies listed on Bombay
Stock Exchange. A sample of 87 companies covering the following industries have
been finally selected for the purpose of the study. Table 2
Sector Automobiles Cements Chemicals Pharmaceuticals Textile & cotton Miscellaneous

Total
No. of companies 12 13 15 19 14 14 87
- 39-
SELECTION OF DATA
While selecting the sample of the companies from six industries, the following
criteria are adopted: 1. The necessary financial data required for calculating the
measures of dependent and independent variable pertaining to all the years 2002-
2006 is available. 2. The companies which did not skip dividend for any two
successive years are included in the sample. 3. The companies whose average earning
per share of any three successive years is not zero or negative is also considered.
4. Further only those companies whose price data is available are retained in the
sample size. 5. The listed shares on Bombay Stock Exchange are considered.
SOURCES OF DATA
1. The data relating to the companies was taken from the CAPITALINE DATABASE such
as earning per share, dividend payout ratio, total assets, gross block, growth
rate, return on capital employed, book value, market capitalization 2. Data
regarding the share prices were taken from the website: www.bseindia.com 3.
Coefficients of determination for various industries were calculated with the help
of SPSS10 software.
STATISTICAL PROCEDURE To Analyze The Determinants Of Equity The Following Model Has
Been Used.
Linear Multiple Regression Model: The linear multiple regression approach has been
applied primarily to minimize the problem of multicollinearity. This technique of
multivariate analysis was selected because it is the most appropriate tool
evaluating the individual and combined effect of set of independent variables on
dependent variable. The significance of coefficient of Rakesh D, MBA 2005-07,M.P
Birla Institute Of Management, Bangalore - 40-
Determinants Of Equity Share Prices: An Empirical Study various explanatory
variables was tested at 5% by computing t-values. To determine the proportion of
explained variation in dependent variables, coefficient of multiple determinations
R2 was worked out. The overall significance of regression equation was tested with
the help of F-values.
Variables Used In Determining The Equity Share Prices:

For the purpose of empirical analysis, share price has been assumed to be dependent
variable while other factors have been taken as independent variable. To explain
the share prices in the year ‘t’ data used to calculate the values of explanatory
variables relate to the year ‘t’ (t refers to the year, the share price of which is
being explained). This is based on the assumption that the dividend decisions made
by a company in a given year as well as other variables are apt to affect the
market price of its share in the following year when the data is publicly made
available.
Share Price (SP)

The forces of demand and supply in the market determine the market price of the
share. SPt = (PH + PL) 2 Where PH is the highest market price, PL is the lowest
market price during the year, which relates to‘t’ period.
Book Value (BV)

It refers to the book value of total shareholders fund. It is extracted from the
balance sheet of the companies. Book Value = LOG(Total Share Capital + Total
Reserves)
- 41-
Dividend Per Share (DPS)

It refers to the actual amount of dividend (gross) declared per share. The net
profit after taxes belong to shareholders but the income that they really receive
is the amount of earnings distributed and paid as cash dividend. The dividends
generally influence the share price in positive direction as depicted by earlier
studies.
Dividend Per Share = Total amount (dividend) paid to equity shareholders
Number of Equity Shares Outstanding
Earnings Per Share (EPS)

The Equity shareholders are the sole claimants to the net earnings of the
corporation after making payment of dividend to the preference shareholders. The
significance of this ratio flows from the fact that higher the earnings per share
the more is the scope for a higher rate of dividend and also of retained earnings,
to build up the inner strength of the company. Therefore, a higher EPS would
increase the market price and vice versa. It is calculated as follows:
EPS =Net Income after interest, income tax & preference dividend
Numbers of Equity Shares Outstanding
Dividend Payout Ratio (DPR)

Dividend Payout shows the percentage share of the net profits after taxes and
preference dividend paid out as dividend to equity shareholders. It can be
calculated by dividing the total dividend paid to the equity shareholders by the
total profits/ earnings available for them. Alternatively, it can be found out by
dividing DPS by EPS. . This predicts direct relation between payout ratio and the
price-earning multiple. Conversely it means that there is an inverse relation
between payout ratio and share price changes.
Dividend Payout =
Total Dividend to equity shareholders
* 100
Total Net Profit belonging to Equity shareholders
- 42-
Determinants Of Equity Share Prices: An Empirical Study Or
Dividend Payout
= Dividend per share Earnings pet share
* 100
Price Earning Ratio (P/E)

P ratio expresses the relationship between the market price of a company’s share
and its earnings per share. It indicates the extent to which the earnings of each
share are covered by its price. The ratio helps an investor to make an approximate
calculation of the time required to recover his investment in a company’s share.
The price ratio has a positive relationship with market price. It was calculated as
follows: P/E = Market price per share Earnings per share
Return on Capital Employed (ROCE)

The return on investment indicates the efficiency with which a company utilizes
funds invested in it. This ratio reveals how well the resources of a firm are being
used, higher the ratio better are the results. The inter comparison of this ratio
determines whether the investments are attractive or not as the investor would like
to invest only where the return is higher. It generally has positive relationship
with marker price of equity share. It is computed as follows Total Capital Employed
= Profit after tax, plus interest * 100 Total Capital Employed
Size (S)
The size of the firm if captured through total market capitalization or total
assets. It is expected to influence the share prices positively as large firms are
better diversified than small ones and thus are less risky. For studying the
influence of size on equity share
- 43-
Determinants Of Equity Share Prices: An Empirical Study price, size may be measured
in terms of total assets, number of shares outstanding, etc. In the present study
gross block is taken to measure the size of the company.
Sales Growth(G)
Growth is measured in terms of net sales in the present study. G = St-St-1 St-1
Where, St St-1 = Net Sales of the current year = Net Sales of the previous year
In the absence of profits, many analysts instead focus on sales growth as a measure
of the future growth potential of such companies, and this is reflected in the
sales-to-stock price ratio
LIMITATIONS OF THE STUDY

Some limitations of the study are. 1. Time constraint and availability of the data.
2. Study covers five sectors and rest of them is taken under miscellaneous
category.
- 44-
CHAPTER IV
ANALYSIS AND INTERPRETATION OF DATA
- 45-
DATA ANALYSIS AND INTERPRETATION

To determine the equity share prices the explanatory variables namely, dividend per
share, earnings per share, dividend payout ratio, return on capital employed, price
earning ratio, book value, growth and size these variables are treated as
independent variable. And the market price is considered to be dependent variable.
For the determinants of equity share prices the data has been collected for four
different sectors for five years from 2002-2006.
To Analyze The Determinants Of Equity The Following Model Has Been Used.
Correlation Analysis.
Is a statistical tool we can use to describe the degree to which one variable is
linearly related to another often correlation analysis is used in conjunction with
regression analysis to measure how well the regression line explains the variation
of dependent variable, Y. correlation can also be used by itself, however, to
measure the degree of association between two variables. Statisticians have
developed two measures for describing correlations between two variables.
Coefficient of determination( r2) Coefficient of correlation
Regression Model :
The regression analysis is concerned with the study of dependence of one variable,
the dependent variable on one or more other variables, the explanatory variables,
with a view to estimating and/or predicting the population mean or average value of
former in terms of the known or fixed ( in repeated sampling) values of the latter.
The linear multiple regression approach has been selected to measure the combined
effects of explanatory variables on dependent variable. The general form of
multiple regression estimating equation is:
- 46-
Y = α + B1X1 + B2 X2…….. + BnXn Where, Y X1,X2,X3, α B1, B2,. Bn = Dependent

variable, =Independent Variables, =Regression Constant, and =Regression
Coefficients of independent variables.
Multiple Regression Analysis

The principle advantage of multiple regression is that it allows us to use more of
information available to us to estimate dependent variable. Some times the
correlation between two variables may be insufficient to determine a reliable
estimating equation. The linear multiple regression approach has been applied to
minimize the problem of multicollinearity. This technique is the most appropriate
tool evaluating the individual and combined effect of set of independent variables
on dependent variable Multiple regression and correlation analysis involve a three
step process: Describe the Multiple regression equation Examine Multiple regression
standard error of estimate Use Multiple correlation analysis to determine how well
the regression equation describes the observed data. The linear multiple regression
approach has been applied primarily to minimize the problem of multicollinearity.
This technique of multivariate analysis was selected because it is the most
appropriate tool evaluating the individual and combined effect of set of
independent variables on dependent variable The significance of coefficient of
various explanatory variables was tested at by computing ‘t-values’. Also with a
view to account for loss of degree of freedom resulting from inclusion of
additional variables, the Adjusted R2 was computed. The ‘F’ value was also computed
to test the significance of the R2 with ‘F’ distribution at 1 and 5% - 47-

Determinants Of Equity Share Prices: An Empirical Study significance level. The
overall significance of regression equation was tested with the help of F-values
Testing the over all significant of multiple regression. 1. R2 and adjusted R2

An important property of R2 is that it is a non decreasing function of the number
of explanatory variables or regressors present in the model: as the number of
regressors increases, R2 almost invariably increases and never decreases. R2 = ESS
TSS Where, RSS is Residual Sum of Squares TSS is Total Sum of Squares ESS is
Explained Sum of Squares Or R2 = 1 - RSS TSS
2. F-Test
An F-test is any statistical test in which the test statistic has an F-distribution
if the null hypothesis is true. A great variety of hypotheses in applied statistics
are tested by F-tests. The hypothesis is that the means of multiple normally
distributed populations, all having the same standard deviation, are equal. This is
perhaps the most well-known of hypotheses tested by means of an F-test, and the
simplest problem in the analysis of variance (ANOVA). The F-distribution is formed
by the ratio of two independent chi-square variables divided by their respective
degrees of freedom. Since F is formed by chi-square, many of the chi-square
properties carry over to the F distribution. • The F-values are all non-negative •
The distribution is non-symmetric • The mean is approximately 1
- 48-
Determinants Of Equity Share Prices: An Empirical Study • There are two independent
degrees of freedom, one for the numerator, and one for the denominator. • There are
many different F distributions, one for each pair of degrees of freedom.
NOTE: It is found that there is a high correlation between size (gross block) and
market capitalization at 5% level of significance. To avoid the problem of
multicollinearity both the variables are excluded from the research for the further
analysis
- 49-
CORRELATION MATRIX: YEAR 2002
Correlations payout Pearson Correlation Sig. (2-tailed) N eps Pearson Correlation

Sig. (2-tailed) N dividend Pearson Correlation Sig. (2-tailed) N peratio Pearson
Correlation Sig. (2-tailed) N growth Pearson Correlation Sig. (2-tailed) N roce
Pearson Correlation Sig. (2-tailed) N bookval Pearson Correlation Sig. (2-tailed) N
payout 1 87 -.072 .505 87 -.008 .942 87 .083 .447 87 -.096 .379 87 -.009 .937 87 .
130 .230 87 eps -.072 .505 87 1 dividend peratio -.008 .083 .942 .447 87 87 .438**
-.098 .000 .364 87 87 87 .438** 1 .097 .000 .373 87 87 87 -.098 .097 1 .364 .373 87
87 87 .038 .072 -.005 .729 .508 .962 87 87 87 .197 .506** .243* .068 .000 .023 87
87 87 .225* .455** .179 .036 .000 .096 87 87 87 growth -.096 .379 87 .038 .729 87 .
072 .508 87 -.005 .962 87 1 87 .063 .564 87 -.018 .872 87 roce bookval -.009 .130 .
937 .230 87 87 .197 .225* .068 .036 87 87 .506** .455** .000 .000 87 87 .243* .
179 .023 .096 87 87 .063 -.018 .564 .872 87 87 1 .062 .570 87 87 .062 1 .570 87 87
**. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is

significant at the 0.05 level (2-tailed).
Interpretation:
There is a significant correlation between Dividend & ROCE, Dividend & Book Value
and Dividend & EPS at 1% level of significance. Excluding that no other variables
are correlated. There would not be any problem of multicollinearity because of
linear multiple regression model being used.
- 50-
REGRESSION RESULTS YEAR 2002

Model Summary Model 1 2 3 R R Square .830a .689 .830b .689 .829c .687 Adjusted R
Square .662 .666 .668 Std. Error of the Estimate 77.61144 77.15247 76.86744
a. Predictors: (Constant), bookval, growth, roce, payout, peratio, eps, dividend b.

Predictors: (Constant), bookval, roce, payout, peratio, eps, dividend c.
Predictors: (Constant), bookval, roce, peratio, eps, dividend
ANOVAd Model 1 Sum of Squares 1055609 475859.3 1531468 1055268 476200.3 1531468
1052871 478596.9 1531468 df 7 79 86 6 80 86 5 81 86 Mean Square 150801.265 6023.535
175877.971 5952.504 210574.255 5908.603 F 25.035 Sig. .000a
Regression Residual Total Regression Residual Total Regression Residual Total
29.547
.000b
35.639
.000c
a. Predictors: (Constant), bookval, growth, roce, payout, peratio, eps, dividend b.

Predictors: (Constant), bookval, roce, payout, peratio, eps, dividend c.
Predictors: (Constant), bookval, roce, peratio, eps, dividend d. Dependent
Variable: avgprice
- 51-
Coefficientsa Unstandardized Coefficients B Std. Error -144.097 33.847 -.067 .110 .

908 .250 .415 .175 4.841 .854 .060 .251 2.504 .766 54.084 15.216 -143.365 33.507
-.069 .109 .908 .248 .417 .174 4.841 .849 2.508 .761 53.955 15.116 -142.747
33.369 .920 .247 .422 .173 4.817 .845 2.502 .759 52.593 14.908 Standardized
Coefficients Beta -.039 .258 .212 .381 .015 .253 .266 -.040 .258 .214 .381 .253 .
265 .262 .216 .379 .253 .259
Model 1
(Constant) payout eps dividend peratio growth roce bookval (Constant) payout eps
dividend peratio roce bookval (Constant) eps dividend peratio roce bookval
t -4.257 -.607 3.638 2.374 5.668 .238 3.269 3.555 -4.279 -.635 3.660 2.405 5.701
3.294 3.569 -4.278 3.730 2.444 5.700 3.298 3.528
Sig. .000 .545 .000 .020 .000 .813 .002 .001 .000 .528 .000 .018 .000 .001 .001 .
000 .000 .017 .000 .001 .001
a. Dependent Variable: avgprice
Interpretation (2002):
Dividend, EPS, P/E Ratio, ROCE, and Bookvalue the most important determinants of
share price for the year 2002 with T- value being 3.3730 & 2.444, 5.700, 3.298 and
3.528 respectively. When backward model is used and when the irrelevant variables
are removed one after the other based on there significance level the t-value of
Dividend, EPS, P/E Ratio, ROCE, and Bookvalue increases to 3.3730 & 2.444, 5.700,
3.298 and 3.528 respectively . The coefficient of multiple determination, (R2),
obtained from the equations indicate that variables included in the equation could
explain 66.2% of the dependent variable share price. The computed F-value 25.035 is
found to be significant at 5% level. The variables Growth and Payout are found to
be insignificant.
- 52-
Correlations payout Pearson Correlatio Sig. (2-tailed) N eps Pearson Correlatio

Sig. (2-tailed) N dividend Pearson Correlatio Sig. (2-tailed) N peratio Pearson
Correlatio Sig. (2-tailed) N growth Pearson Correlatio Sig. (2-tailed) N roce
Pearson Correlatio Sig. (2-tailed) N bookvalu Pearson Correlatio Sig. (2-tailed) N
payout 1 87 -.052 .634 87 .216* .045 87 .575** .000 87 .052 .634 87 .041 .708 87 .
145 .180 87 eps -.052 .634 87 1 dividend peratio growth .216* .575** .052 .045 .000
.634 87 87 87 .451** -.104 .041 .000 .339 .708 87 87 87 87 .451** 1 -.035 .062 .000
.747 .570 87 87 87 87 -.104 -.035 1 .090 .339 .747 .405 87 87 87 87 .041 .062 .090
1 .708 .570 .405 87 87 87 87 .223* .289** -.040 .017 .037 .007 .710 .877 87 87 87
87 .220* .261* .095 .040 .041 .015 .382 .711 87 87 87 87 roce bookvalu .041 .145 .
708 .180 87 87 .223* .220* .037 .041 87 87 .289** .261* .007 .015 87 87 -.040 .
095 .710 .382 87 87 .017 .040 .877 .711 87 87 1 .193 .074 87 87 .193 1 .074 87 87
*. Correlation is significant at the 0.05 level (2-tailed). **. Correlation is

Interpretation:
There is a significant correlation between Payout & PE ratio, Dividend & EPS and
Dividend & ROCE at 1% level of significance. Excluding that no other variables are
correlated. Therefore there would not be any problem of multicollinearity because
of linear multiple regression model being used.
- 53-

Model Summary Adjusted R Square .461 .467 .472 .475 Std. Error of the Estimate
121.9857 121.2735 120.7522 120.3311
Model 1 2 3 4
R R Square .711a .505 .710b .504 c .709 .502 .707d .500
a. Predictors: (Constant), BOOKVAL, GROWTH, PERATIO, ROCE, EPS, DIVIDEND, PAYOUT b.

Predictors: (Constant), BOOKVAL, GROWTH, PERATIO, ROCE, EPS, DIVIDEND c.
Predictors: (Constant), BOOKVAL, GROWTH, ROCE, EPS, DIVIDEND d. Predictors:
(Constant), BOOKVAL, GROWTH, ROCE, EPS
ANOVAe Sum of Squares 1198432 1175560 2373992 1197411 1176582 2373992 1192923
1181069 2373992 1186666 1187326 2373992
Model 1
df 7 79 86 6 80 86 5 81 86 4 82 86

Regression Residual Total
Mean Square 171204.635 14880.504 199568.440 14707.270 238584.679 14581.097

296666.567 14479.585
F 11.505
Sig. .000a
13.569
.000b
16.363
.000c
20.489
.000d
a. Predictors: (Constant), BOOKVAL, GROWTH, PERATIO, ROCE, EPS, DIVIDEND, PAYOUT b.

Predictors: (Constant), BOOKVAL, GROWTH, PERATIO, ROCE, EPS, DIVIDEND c.
Predictors: (Constant), BOOKVAL, GROWTH, ROCE, EPS, DIVIDEND d. Predictors:
(Constant), BOOKVAL, GROWTH, ROCE, EPS e. Dependent Variable: AVGPRICE
- 54-
Coefficients
Model 1
(Constant) PAYOUT EPS DIVIDEND PERATIO GROWTH ROCE BOOKVAL (Constant) EPS DIVIDEND
PERATIO GROWTH ROCE BOOKVAL (Constant) EPS DIVIDEND GROWTH ROCE BOOKVAL (Constant)
EPS GROWTH ROCE BOOKVAL
Unstandardized Coefficients B Std. Error -180.143 50.672 -.188 .716 .574 .401
4.082E-02 .058 .243 .405 -1.062 .526 4.284 .921 106.393 21.558 -183.866 48.355 .589
.394 3.625E-02 .055 .180 .327 -1.060 .522 4.284 .915 106.074 21.398 -183.996 48.147
.565 .390 3.605E-02 .055 -1.033 .518 4.266 .911 107.523 21.145 -190.779 46.856 .664
.358 -1.018 .516 4.381 .890 109.699 20.810
Standardi zed Coefficien ts Beta -.027 .131 .068 .059 -.161 .390 .414 .134 .060 .
044 -.161 .390 .413 .129 .060 -.157 .388 .419 .151 -.154 .399 .427
t -3.555 -.262 1.431 .701 .599 -2.021 4.654 4.935 -3.802 1.494 .656 .552 -2.028
4.680 4.957 -3.822 1.448 .655 -1.994 4.684 5.085 -4.072 1.855 -1.975 4.920 5.271
Sig. .001 .794 .156 .486 .551 .047 .000 .000 .000 .139 .514 .582 .046 .000 .000 .
000 .151 .514 .049 .000 .000 .000 .067 .052 .000 .000
a. Dependent Variable: AVGPRICE
Book value and ROCE are the most important determinants of share price for the year
2003 with positive t- values. When backward model is applied, variables are removed
one after the other based on there significance level the t-value of Book value,
ROCE, EPS increases to 5.271 & 4.920 respectively. The coefficient of multiple
determination, (R2), obtained from the equations indicate that variables included
in the equation could explain 46.1% of the dependent variable share price. The
computed F-value 11.505 is found to be significant at 5% level. The variables
Growth and Payout are found to be insignificant with negative values. Rakesh D, MBA
2005-07,M.P Birla Institute Of Management, Bangalore - 55-

Pearson Correlation Sig. (2-tailed) N bookval Pearson Correlation Sig. (2-tailed) N
payout 1 87 -.050 .647 87 -.026 .814 87 .056 .608 87 -.023 .830 87 -.067 .538 87
-.120 .269 87 eps -.050 .647 87 1 dividend peratio -.026 .056 .814 .608 87 87 .232*
-.096 .030 .377 87 87 87 .232* 1 .108 .030 .321 87 87 87 -.096 .108 1 .377 .321 87
87 87 .081 -.153 -.057 .456 .156 .603 87 87 87 .017 .309** .179 .876 .004 .097 87
87 87 .020 .496** .146 .851 .000 .177 87 87 87 growth -.023 .830 87 .081 .456 87
-.153 .156 87 -.057 .603 87 1 87 .081 .457 87 -.177 .100 87 roce bookval -.067
-.120 .538 .269 87 87 .017 .020 .876 .851 87 87 .309** .496** .004 .000 87 87 .
179 .146 .097 .177 87 87 .081 -.177 .457 .100 87 87 1 .217* .044 87 87 .217* 1 .044
87 87

Interpretation:
There is a significant correlation between Dividend & EPS and Dividend & Book value
at 1% level of significance. Excluding that no other variables are correlated.
Therefore there would not be any problem of multicollinearity because of linear
multiple regression model being used..
- 56-

Model Summary Adjusted R Square .429 .436 .443 .448 .451 Std. Error of the Estimate
196.6439 195.4157 194.2152 193.3043 192.7421
Model 1 2 3 4 5
R R Square .689a .475 .689b .475 c .689 .475 .688d .474 .686e .470
a. Predictors: (Constant), BOOKVAL, EPS, PAYOUT, PERATIO, GROWTH, ROCE, DIVIDEND b.

Predictors: (Constant), BOOKVAL, EPS, PAYOUT, PERATIO, ROCE, DIVIDEND c.
Predictors: (Constant), BOOKVAL, EPS, PERATIO, ROCE, DIVIDEND d. Predictors:
(Constant), BOOKVAL, PERATIO, ROCE, DIVIDEND e. Predictors: (Constant), BOOKVAL,
PERATIO, ROCE
ANOVAf Sum of Squares 2766912 3054837 5821749 2766765 3054984 5821749 2766465
3055284 5821749 2757691 3064058 5821749 2738340 3083409 5821749
Model 1
df 7 79 86 6 80 86 5 81 86 4 82 86 3 83 86

Regression Residual Total Regression Residual Total
Mean Square 395273.152 38668.825 461127.520 38187.301 553292.983 37719.559

689422.714 37366.566 912779.992 37149.509
F 10.222
Sig. .000a
12.075
.000b
14.669
.000c
18.450
.000d
24.570
.000e
a. Predictors: (Constant), BOOKVAL, EPS, PAYOUT, PERATIO, GROWTH, ROCE, DIVIDEND b.

Predictors: (Constant), BOOKVAL, EPS, PERATIO, ROCE, DIVIDEND d. Predictors:
(Constant), BOOKVAL, PERATIO, ROCE, DIVIDEND e. Predictors: (Constant), BOOKVAL,
PERATIO, ROCE f. Dependent Variable: AVGPRICE
- 57-
Coefficients
Model 1
(Constant) PAYOUT EPS DIVIDEND PERATIO GROWTH ROCE BOOKVAL (Constant) PAYOUT EPS
DIVIDEND PERATIO ROCE BOOKVAL (Constant) EPS DIVIDEND PERATIO ROCE BOOKVAL
(Constant) DIVIDEND PERATIO ROCE BOOKVAL (Constant) PERATIO ROCE BOOKVAL
Unstandardized Coefficients B Std. Error -323.455 92.239 -2.70E-02 .302 5.805E-02 .

122 .141 .256 3.836 1.512 -7.36E-02 1.195 5.640 1.378 157.395 39.859 -325.327
86.554 -2.66E-02 .300 5.721E-02 .121 .143 .252 3.840 1.501 5.627 1.353 157.681
39.342 -327.224 83.353 5.779E-02 .120 .141 .250 3.830 1.488 5.635 1.341 158.140
38.760 -321.706 82.177 .173 .240 3.752 1.472 5.612 1.334 156.306 38.392 -341.317
77.301 3.757 1.468 5.837 1.293 169.009 33.994
Standardi zed Coefficien ts Beta -.007 .041 .056 .214 -.005 .361 .381 -.007 .040 .
056 .214 .360 .382 .040 .056 .213 .361 .383 .068 .209 .359 .379 .209 .374 .409
t -3.507 -.090 .475 .549 2.538 -.062 4.093 3.949 -3.759 -.089 .474 .566 2.558 4.160
4.008 -3.926 .482 .565 2.574 4.201 4.080 -3.915 .720 2.549 4.206 4.071 -4.415 2.560
4.514 4.972
Sig. .001 .929 .636 .585 .013 .951 .000 .000 .000 .930 .637 .573 .012 .000 .000 .
000 .631 .574 .012 .000 .000 .000 .474 .013 .000 .000 .000 .012 .000 .000
Book value P/E ratio and ROCE are the highly significant determinants for year 2004
with positive t- values. . The coefficient of multiple determination, (R2),
explain 42.9 % of the dependent variable share price. The computed F-value 10.222
is found to be significant at 5% level. The variables Growth and Payout are found
to be insignificant with negative tvalues.
- 58-

Pearson Correlatio Sig. (2-tailed) N bookval Pearson Correlatio Sig. (2-tailed) N
payout 1 87 -.165 .126 87 .088 .420 87 .154 .154 87 .149 .167 87 .133 .218 87 -.028
.799 87 eps -.165 .126 87 1 dividend peratio .088 .154 .420 .154 87 87 .486** -.134
.000 .218 87 87 87 .486** 1 -.045 .000 .680 87 87 87 -.134 -.045 1 .218 .680 87 87
87 .132 .080 .109 .224 .461 .317 87 87 87 .283** .273* -.014 .008 .011 .901 87 87
87 .574** .467** -.130 .000 .000 .232 87 87 87 growth .149 .167 87 .132 .224 87 .
080 .461 87 .109 .317 87 1 87 -.038 .725 87 .022 .840 87 roce bookval .133 -.028 .
218 .799 87 87 .283** .574** .008 .000 87 87 .273* .467** .011 .000 87 87 -.014
-.130 .901 .232 87 87 -.038 .022 .725 .840 87 87 1 .231* .031 87 87 .231* 1 .031 87
87

Interpretation:
There is a significant correlation between Dividend & EPS Dividend & Book value and
EPS & Book value at 1% level of significance. Excluding that no other variables are
correlated. There would not be any problem of multicollinearity because of linear
multiple regression model being used.
- 59-

Model Summary Adjusted R Square .458 .460 .459 Std. Error of the Estimate 247.2454
246.8029 246.9405
Model 1 2 3
R R Square .709a .502 .705b .498 c .700 .491
a. Predictors: (Constant), BOOKVALU, GROWTH, PAYOUT, PERATIO, ROCE, DIVIDEND, EPS

b. Predictors: (Constant), BOOKVALU, GROWTH, PERATIO, ROCE, DIVIDEND, EPS c.
Predictors: (Constant), BOOKVALU, GROWTH, PERATIO, ROCE, EPS
ANOVAd Sum of Squares 4868595 4829294 9697889 4824957 4872932 9697889 4758541
4939348 9697889
Model 1
df 7 79 86 6 80 86 5 81 86
Mean Square 695513.565 61130.306 804159.449 60911.656 951708.159 60979.609
F 11.378
Sig. .000a
13.202
.000b
15.607
.000c
a. Predictors: (Constant), BOOKVALU, GROWTH, PAYOUT, PERATIO, ROCE, DIVIDEND, EPS

b. Predictors: (Constant), BOOKVALU, GROWTH, PERATIO, ROCE, DIVIDEND, EPS c.
Predictors: (Constant), BOOKVALU, GROWTH, PERATIO, ROCE, EPS d. Dependent Variable:
AVGPRICE
- 60-
Coefficientsa Standardi zed Coefficien ts Beta .072 .377 .087 .142 -.170 .245 .
227 .353 .099 .150 -.158 .258 .231 .382 .153 -.154 .271 .258
Model 1
(Constant) PAYOUT EPS DIVIDEND PERATIO GROWTH ROCE BOOKVALU (Constant) EPS DIVIDEND
PERATIO GROWTH ROCE BOOKVALU (Constant) EPS PERATIO GROWTH ROCE BOOKVALU
Unstandardized Coefficients B Std. Error -225.169 117.251 .890 1.054 5.077 1.455 .
167 .185 1.085 .622 -2.292 1.111 4.736 1.656 120.815 53.909 -207.406 115.144 4.748
1.400 .190 .182 1.144 .617 -2.122 1.091 4.985 1.627 123.028 53.749 -237.576 111.522
5.138 1.350 1.165 .617 -2.072 1.090 5.232 1.610 137.412 51.982
t -1.920 .845 3.489 .905 1.745 -2.063 2.860 2.241 -1.801 3.393 1.044 1.855 -1.945
3.065 2.289 -2.130 3.807 1.888 -1.900 3.250 2.643
Sig. .058 .401 .001 .368 .085 .042 .005 .028 .075 .001 .300 .067 .055 .003 .025 .
036 .000 .063 .061 .002 .010
Book value, EPS and ROCE are the highly significant determinants for year 2005 with
positive t- values. . The coefficient of multiple determination, (R2), obtained
from the equations indicate that variables included in the equation could explain
45.8 % of the dependent variable share price. The computed F-value 11.378 is found
to be significant at 5% level. The variables Dividend and Payout are found to be
insignificant with negative t-values.
- 61-
Correlations payou Pearson Correlatio Sig. (2-tailed) N epss Pearson Correlatio

Pearson Correlatio Sig. (2-tailed) N bookval Pearson Correlatio Sig. (2-tailed) N
payou 1 87 -.217* .044 87 .078 .471 87 .291** .006 87 -.208 .053 87 .052 .633 87
-.002 .984 87 epss dividend peratio growth -.217* .078 .291** -.208 .044 .471 .
006 .053 87 87 87 87 1 .540** .063 .036 .000 .564 .737 87 87 87 87 .540** 1 .030
-.026 .000 .781 .810 87 87 87 87 .063 .030 1 .237* .564 .781 .027 87 87 87 87 .036
-.026 .237* 1 .737 .810 .027 87 87 87 87 .346** .358** -.014 .097 .001 .001 .898 .
373 87 87 87 87 .513** .512** .099 .148 .000 .000 .360 .171 87 87 87 87 roce
bookval .052 -.002 .633 .984 87 87 .346** .513** .001 .000 87 87 .358** .512** .001
.000 87 87 -.014 .099 .898 .360 87 87 .097 .148 .373 .171 87 87 1 .274* .010 87
87 .274* 1 .010 87 87

Interpretation:
There is a significant correlation between Payout & EPS & Book value, EPS and
Dividend & Book value at 1% level of significance. Excluding that no other
variables are correlated. There would not be any problem of multicollinearity
because of linear multiple regression model being used.
- 62-

289.0781 287.2748 285.7508 284.5056 285.0996
Model 1 2 3 4 5
R R Square .877a .770 .877b .770 c .877 .769 .877d .768 .874e .765
a. Predictors: (Constant), BOOKVAL, PAYOU, GROWTH, ROCE, PERATIO, DIVIDEND, EPSS b.

Predictors: (Constant), BOOKVAL, PAYOU, GROWTH, ROCE, PERATIO, EPSS c. Predictors:
(Constant), BOOKVAL, PAYOU, GROWTH, PERATIO, EPSS d. Predictors: (Constant),
BOOKVAL, PAYOU, PERATIO, EPSS e. Predictors: (Constant), PAYOU, PERATIO, EPSS
6613937 28648702 22011342 6637360 28648702 21902315 6746387 28648702
Model 1
df 7 79 86 6 80 86 5 81 86 4 82 86 3 83 86

Mean Square 3149568.089 83566.142 3674426.071 82526.818 4406952.976 81653.543

5502835.513 80943.412 7300771.605 81281.771
F 37.690
Sig. .000a
44.524
.000b
53.971
.000c
67.984
.000d
89.821
.000e
a. Predictors: (Constant), BOOKVAL, PAYOU, GROWTH, ROCE, PERATIO, DIVIDEND, EPSS b.

Predictors: (Constant), BOOKVAL, PAYOU, GROWTH, ROCE, PERATIO, EPSS c. Predictors:
(Constant), BOOKVAL, PAYOU, GROWTH, PERATIO, EPSS d. Predictors: (Constant),
BOOKVAL, PAYOU, PERATIO, EPSS e. Predictors: (Constant), PAYOU, PERATIO, EPSS f.
Dependent Variable: AVGPRICE
- 63-
Coefficients a Standardi zed Coefficien ts Beta .116 .793 -.005 .232 .028 .023 .066
.115 .791 .233 .028 .022 .064 .120 .798 .230 .031 .066 .109 .793 .240 .073 .117 .
832 .243
Model 1
(Constant) PAYOU EPSS DIVIDEND PERATIO GROWTH ROCE BOOKVAL (Constant) PAYOU EPSS
PERATIO GROWTH ROCE BOOKVAL (Constant) PAYOU EPSS PERATIO GROWTH BOOKVAL (Constant)
PAYOU EPSS PERATIO BOOKVAL (Constant) PAYOU EPSS PERATIO
Unstandardized Coefficients B Std. Error -402.480 134.069 2.633 1.450 19.879 1.860
-2.15E-02 .303 5.799 1.518 .656 1.410 .816 2.135 58.956 60.819 -399.589 126.923
2.615 1.418 19.831 1.721 5.806 1.505 .662 1.399 .791 2.091 57.651 57.606 -394.659
125.581 2.714 1.387 20.025 1.635 5.731 1.484 .738 1.377 59.418 57.111 -387.398
124.303 2.475 1.307 19.901 1.611 5.985 1.400 64.918 55.936 -263.512 63.827 2.644
1.302 20.870 1.381 6.050 1.402
t -3.002 1.816 10.690 -.071 3.821 .465 .382 .969 -3.148 1.844 11.523 3.857 .473 .
378 1.001 -3.143 1.957 12.251 3.862 .536 1.040 -3.117 1.894 12.352 4.275 1.161
-4.129 2.031 15.113 4.317
Sig. .004 .073 .000 .944 .000 .643 .703 .335 .002 .069 .000 .000 .637 .706 .320 .
002 .054 .000 .000 .594 .301 .003 .062 .000 .000 .249 .000 .045 .000 .000
Payout, Payout and P/E ratio are the highly significant determinants for year 2006
with positive t- values. . The coefficient of multiple determination, (R2),
explain 74.9 % of the dependent variable share price. The computed F-value 37.690
is found to be significant at 5% level. The variables Dividend and Payout are found
to be insignificant with negative t-values.
- 64-
INDUSTRY –WISE CORRELATIONS

CORRELATION MATRIX: AUTOMOBILE
Correlations payout Pearson Correlat Sig. (2-tailed) N eps Pearson Correlat Sig.
(2-tailed) N dividend Pearson Correlat Sig. (2-tailed) N peratio Pearson Correlat
Sig. (2-tailed) N growth Pearson Correlat Sig. (2-tailed) N roce Pearson Correlat
Sig. (2-tailed) N bookval Pearson Correlat Sig. (2-tailed) N payout 1 60 -.379** .
003 60 -.117 .375 60 .154 .241 60 -.166 .205 60 -.326* .011 60 -.011 .936 60 eps
dividend peratio -.379** -.117 .154 .003 .375 .241 60 60 60 1 .900** .154 .000 .240
60 60 60 .900** 1 .249 .000 .055 60 60 60 .154 .249 1 .240 .055 60 60 60 .239 .256*
.174 .066 .049 .183 60 60 60 .233 .173 .042 .073 .187 .748 60 60 60 .626** .715** .
015 .000 .000 .908 60 60 60 growth -.166 .205 60 .239 .066 60 .256* .049 60 .174 .
183 60 1 roce bookval -.326* -.011 .011 .936 60 60 .233 .626** .073 .000 60 60 .173
.715** .187 .000 60 60 .042 .015 .748 .908 60 60 .331** .120 .010 .361 60 60 60 .
331** 1 -.091 .010 .491 60 60 60 .120 -.091 1 .361 .491 60 60 60
**.Correlation is significant at the 0.01 level (2-tailed). *. Correlation is

Interpretation:
There is a significant correlation between Payout & EPS and EPS, Dividend & Book
value at 1% level of significance. Excluding that no other variables are
- 65-
REGRESSION RESULTS AUTOMOBILE INDUSTRY
127.2799 127.4936
Model 1 2 3
R R Square .953a .909 .953b .908 c .952 .906
a. Predictors: (Constant), BOOKVAL, PAYOUT, PERATIO, GROWTH, ROCE, EPS, DIVIDEND b.

Predictors: (Constant), BOOKVAL, PERATIO, GROWTH, ROCE, EPS, DIVIDEND c.
Predictors: (Constant), BOOKVAL, PERATIO, ROCE, EPS, DIVIDEND
ANOVAd Sum of Squares 8527504 854344.1 9381848 8523239 858608.7 9381848 8504099
877749.6 9381848
Model 1
df 7 52 59 6 53 59 5 54 59
Mean Square 1218214.873 16429.694 1420539.914 16200.165 1700819.722 16254.622
F 74.147
Sig. .000a
87.687
.000b
104.636
.000c
a. Predictors: (Constant), BOOKVAL, PAYOUT, PERATIO, GROWTH, ROCE, EPS, DIVIDEND b.

Predictors: (Constant), BOOKVAL, PERATIO, GROWTH, ROCE, EPS, DIVIDEND c.
Predictors: (Constant), BOOKVAL, PERATIO, ROCE, EPS, DIVIDEND d. Dependent
Variable: AVGPRICE
- 66-
Coefficientsa Standardi zed Coefficien ts Beta .029 .338 .798 .119 -.047 -.080
-.258 .299 .829 .122 -.049 -.085 -.256 .300 .821 .116 -.100 -.259
Model 1
PERATIO GROWTH ROCE BOOKVAL (Constant) EPS DIVIDEND PERATIO ROCE BOOKVAL
Unstandardized Coefficients B Std. Error 57.184 101.578 .727 1.427 6.870 2.533
4.835 .785 4.873 1.895 -1.197 1.178 -2.428 1.472 -132.561 33.577 89.393 78.949
6.089 2.003 5.021 .690 5.012 1.862 -1.264 1.163 -2.579 1.431 -131.752 33.304 90.204
79.078 6.115 2.006 4.973 .689 4.759 1.850 -3.041 1.369 -132.957 33.342
t .563 .509 2.712 6.162 2.572 -1.016 -1.649 -3.948 1.132 3.040 7.280 2.692 -1.087
-1.802 -3.956 1.141 3.048 7.213 2.572 -2.221 -3.988
Sig. .576 .613 .009 .000 .013 .314 .105 .000 .263 .004 .000 .009 .282 .077 .000 .
259 .004 .000 .013 .031 .000
Interpretation (AUTOMOBILE INDUSTRY):

EPS, Dividend and P/E ratio are the highly significant determinants for auto
industry with positive t- values. . The coefficient of multiple determination,
(R2), obtained from the equations indicate that variables included in the equation
could explain 87.9 % of the dependent variable share price. The computed F-value
74.147 is found to be significant at 5% level. The variables Dividend and Payout
are found to be insignificant with negative t-values.
- 67-
CORRELATION MATRIX: CEMENTS

payout 1 65 -.130 .302 65 -.050 .695 65 .201 .109 65 -.162 .197 65 .048 .703 65 .
089 .482 65 eps -.130 .302 65 1 dividend peratio -.050 .201 .695 .109 65 65 .394**
-.111 .001 .378 65 65 65 .394** 1 -.002 .001 .990 65 65 65 -.111 -.002 1 .378 .990
65 65 65 -.009 .196 .196 .944 .118 .117 65 65 65 .153 .498** -.081 .224 .000 .522
65 65 65 .242 .459** .134 .052 .000 .286 65 65 65 growth -.162 .197 65 -.009 .944
65 .196 .118 65 .196 .117 65 1 65 .504** .000 65 .286* .021 65 roce bookvalu .048 .
089 .703 .482 65 65 .153 .242 .224 .052 65 65 .498** .459** .000 .000 65 65 -.081 .
134 .522 .286 65 65 .504** .286* .000 .021 65 65 1 .381** .002 65 65 .381** 1 .002
65 65

Interpretation:
There is a significant correlation between Dividend & EPS, Dividend & Book value
and ROCE & Dividend at 1% level of significance. Excluding that no other variables
are correlated. There would not be any problem of multicollinearity because of
linear multiple regression model is being used for the further analysis.
- 68-
REGRESSION RESULTS CEMENTS INDUSTRY

362.1219 359.0226 356.1585 354.4937 352.4704
Model 1 2 3 4 5
R .593a .592b .592c .588d .585e
R Square .351 .351 .350 .345 .342
a. Predictors: (Constant), BOOKVAL, PAYOUT, PERATIO, EPS, GROWTH, DIVIDEND, ROCE b.

Predictors: (Constant), BOOKVAL, PERATIO, EPS, GROWTH, DIVIDEND, ROCE c.
Predictors: (Constant), PERATIO, EPS, GROWTH, DIVIDEND, ROCE d. Predictors:
(Constant), PERATIO, EPS, DIVIDEND, ROCE e. Predictors: (Constant), PERATIO, EPS,
DIVIDEND
- 69-
ANOVA f Sum of Squares 4044862 7474541 11519403 4043365 7476037 11519403 4035321
7484082 11519403 3979457 7539946 11519403 3941043 7578360 11519403
Model 1
df 7 57 64 6 58 64 5 59 64 4 60 64 3 61 64

Mean Square 577837.418 131132.297 673894.250 128897.196 807064.112 126848.852

994864.168 125665.770 1313681.002 124235.407
F 4.407
Sig. .001a
5.228
.000b
6.362
.000c
7.917
.000d
10.574
.000e
a. Predictors: (Constant), BOOKVAL, PAYOUT, PERATIO, EPS, GROWTH, DIVIDEND, ROCE b.

Predictors: (Constant), BOOKVAL, PERATIO, EPS, GROWTH, DIVIDEND, ROCE c.
Predictors: (Constant), PERATIO, EPS, GROWTH, DIVIDEND, ROCE d. Predictors:
(Constant), PERATIO, EPS, DIVIDEND, ROCE e. Predictors: (Constant), PERATIO, EPS,
DIVIDEND f. Dependent Variable: AVGPRICE
- 70-
Coefficientsa Standardi zed Coefficien ts Beta -.012 .320 .377 .175 .076 -.116 .033
.322 .379 .172 .081 -.120 .031 .325 .389 .176 .084 -.115 .322 .383 .196 -.067 .
326 .348 .202
Model 1
PERATIO GROWTH ROCE BOOKVAL (Constant) EPS DIVIDEND PERATIO GROWTH ROCE (Constant)
EPS DIVIDEND PERATIO ROCE (Constant) EPS DIVIDEND PERATIO
Unstandardized Coefficients B Std. Error -31.633 192.675 -6.52E-02 .610 4.269 1.589
3.148 1.168 1.449 .975 1.316 2.379 -7.431 9.558 23.974 92.356 -30.329 190.642 4.291
1.563 3.162 1.151 1.421 .933 1.397 2.234 -7.665 9.224 22.677 90.770 8.790 107.883
4.337 1.540 3.243 1.095 1.457 .915 1.461 2.202 -7.346 9.062 -9.068 103.985 4.290
1.531 3.196 1.087 1.622 .876 -4.300 7.777 -52.751 67.219 4.346 1.519 2.903 .944
1.671 .866
t -.164 -.107 2.686 2.694 1.486 .553 -.778 .260 -.159 2.746 2.747 1.524 .625
-.831 .250 .081 2.817 2.963 1.593 .664 -.811 -.087 2.802 2.939 1.852 -.553 -.785
2.862 3.074 1.928
Sig. .870 .915 .009 .009 .143 .582 .440 .796 .874 .008 .008 .133 .534 .409 .804 .
935 .007 .004 .117 .510 .421 .931 .007 .005 .069 .582 .436 .006 .003 .058
Interpretation (CEMENT INDUSTRY):

EPS and Dividend are the highly significant determinants for cement industry with
27.1 % of the dependent variable share price. The computed F-value 4.407 is found
to be significant at 5% level. The variables Dividend and Payout are found to be
insignificant with negative t-values.
- 71-
CORRELATION MATRIX: CHEMICALS

payout 1 75 -.108 .357 75 .336** .003 75 .223 .055 75 -.033 .781 75 -.044 .709 75 .
068 .565 75 eps -.108 .357 75 1 dividend peratio .336** .223 .003 .055 75 75 .484**
-.093 .000 .426 75 75 75 .484** 1 -.134 .000 .250 75 75 75 -.093 -.134 1 .426 .250
75 75 75 .009 -.133 .166 .939 .257 .153 75 75 75 .085 .494** -.224 .466 .000 .053
75 75 75 -.007 .399** -.179 .954 .000 .124 75 75 75 growth -.033 .781 75 .009 .939
75 -.133 .257 75 .166 .153 75 1 75 -.001 .995 75 -.152 .192 75 roce bookvalu
-.044 .068 .709 .565 75 75 .085 -.007 .466 .954 75 75 .494** .399** .000 .000 75 75
-.224 -.179 .053 .124 75 75 -.001 -.152 .995 .192 75 75 1 .501** .000 75 75 .501**
1 .000 75 75
**. Correlation is significant at the 0.01 level (2-tailed).
Interpretation:
There is a significant correlation between Dividend & EPS, Dividend & ROCE, EPS and
ROCE & Book Value at 1% level of significance. Except that no other variables are
- 72-
REGRESSION RESULTS CHEMICALS INDUSTRY

Model Summary Adjusted R Square .119 .132 .142 .145 .151 .132 Std. Error of the
Estimate 105.1989 104.4230 103.8175 103.6049 103.2922 104.4412
Model 1 2 3 4 5 6
R .450a .450b .447c .438d .430e .394f
R Square .202 .202 .200 .192 .185 .155
a. Predictors: (Constant), BOOKVAL, EPS, PAYOUT, GROWTH, PERATIO, ROCE, DIVIDEND b.

Predictors: (Constant), BOOKVAL, EPS, PAYOUT, PERATIO, DIVIDEND d. Predictors:
(Constant), BOOKVAL, PAYOUT, PERATIO, DIVIDEND e. Predictors: (Constant), BOOKVAL,
PERATIO, DIVIDEND f. Predictors: (Constant), PERATIO, DIVIDEND
- 73-
ANOVAg Sum of Squares 188007.8 741476.9 929484.7 188001.2 741483.5 929484.7

185797.5 743687.2 929484.7 178105.7 751378.9 929484.7 171965.9 757518.7 929484.7
144111.8 785372.9 929484.7
Model 1
df 7 67 74 6 68 74 5 69 74 4 70 74 3 71 74 2 72 74

Mean Square 26858.257 11066.819 31333.534 10904.168 37159.495 10778.075 44526.430

10733.985 57321.975 10669.278 72055.882 10907.957
F 2.427
Sig. .028a
2.874
.015b
3.448
.008c
4.148
.005d
5.373
.002e
6.606
.002f
a. Predictors: (Constant), BOOKVAL, EPS, PAYOUT, GROWTH, PERATIO, ROCE, DIVIDEND b.

Predictors: (Constant), BOOKVAL, EPS, PAYOUT, PERATIO, DIVIDEND d. Predictors:
(Constant), BOOKVAL, PAYOUT, PERATIO, DIVIDEND e. Predictors: (Constant), BOOKVAL,
PERATIO, DIVIDEND f. Predictors: (Constant), PERATIO, DIVIDEND g. Dependent
Variable: AVGPRICE

- 74-
Coefficientsa Standardi zed Coefficien ts Beta -.146 -.129 .428 .285 -.003 -.064 .
175 -.146 -.130 .429 .284 -.064 .175 -.129 -.115 .392 .288 .157 -.090 .311 .285 .
187 .276 .260 .191 .348 .236
Model 1
DIVIDEND PERATIO ROCE BOOKVAL (Constant) PAYOUT EPS DIVIDEND PERATIO BOOKVAL
(Constant) PAYOUT DIVIDEND PERATIO BOOKVAL (Constant) DIVIDEND PERATIO BOOKVAL
(Constant) DIVIDEND PERATIO
Unstandardized Coefficients B Std. Error -26.949 79.284 -.556 .517 -7.25E-02 .080 .
984 .421 1.679 .694 -7.14E-03 .293 -1.070 2.453 55.841 42.429 -27.236 77.827
-.557 .512 -7.27E-02 .079 .986 .413 1.676 .680 -1.080 2.402 55.964 41.819 -31.599
76.771 -.491 .488 -6.46E-02 .076 .901 .365 1.698 .675 50.235 39.599 -48.575 73.943
-.345 .456 .714 .290 1.679 .673 59.812 37.864 -56.635 72.950 .634 .269 1.536 .644
60.947 37.720 56.977 19.649 .801 .251 1.393 .645
t -.340 -1.077 -.907 2.340 2.420 -.024 -.436 1.316 -.350 -1.087 -.920 2.386 2.464
-.450 1.338 -.412 -1.006 -.845 2.466 2.518 1.269 -.657 -.756 2.460 2.495 1.580
-.776 2.353 2.386 1.616 2.900 3.187 2.160
Sig. .735 .285 .368 .022 .018 .981 .664 .193 .727 .281 .361 .020 .016 .654 .185 .
682 .318 .401 .016 .014 .209 .513 .452 .016 .015 .119 .440 .021 .020 .111 .005 .002
.034
Interpretation (CHEMICALS INDUSTRY):

Dividend and PE ratio are the significant determinants for cement industry with
11.9 % variation of the dependent variable share price. The computed F-value 6.606
is found to be significant at 5% level. The variables Growth, ROCE and EPS are
found to be insignificant with negative t-values. - 75-

CORRELATION MATRIX: PHARMACEUTICALS

payout 1 95 -.123 .236 95 .275** .007 95 .471** .000 95 -.112 .279 95 -.147 .154 95
.297** .003 95 eps -.123 .236 95 1 dividend peratio growth .275** .471** -.112 .007
.000 .279 95 95 95 .525** .030 -.067 .000 .775 .519 95 95 95 95 .525** 1 .146 -.165
.000 .157 .111 95 95 95 95 .030 .146 1 .046 .775 .157 .659 95 95 95 95 -.067
-.165 .046 1 .519 .111 .659 95 95 95 95 .608** .467** -.062 -.067 .000 .000 .549 .
520 95 95 95 95 .457** .660** .194 -.058 .000 .000 .059 .578 95 95 95 95 roce
bookvalu -.147 .297** .154 .003 95 95 .608** .457** .000 .000 95 95 .467** .660** .
000 .000 95 95 -.062 .194 .549 .059 95 95 -.067 -.058 .520 .578 95 95 1 .167 .105
95 95 .167 1 .105 95 95
**. Correlation is significant at the 0.01 level (2-tailed).
Interpretation:
ROCE, Dividend & Book Value at 1% level of significance. Except that no other
variables are correlated. Therefore there would not be any problem of
multicollinearity because of linear multiple regression model being used.
- 76-
REGRESSION RESULTS PHARMACEUTICALS INDUSTRY

163.0839 162.1557 161.2473 161.6533
Model 1 2 3 4
R R Square .870a .756 .870b .756 c .870 .756 .867d .752
a. Predictors: (Constant), BOOKVALU, GROWTH, ROCE, PERATIO, PAYOUT, EPS, DIVIDEND

b. Predictors: (Constant), BOOKVALU, ROCE, PERATIO, PAYOUT, EPS, DIVIDEND c.
Predictors: (Constant), BOOKVALU, ROCE, PERATIO, PAYOUT, EPS d. Predictors:
(Constant), ROCE, PERATIO, PAYOUT, EPS
ANOVAe Sum of Squares 7178678 2313883 9492561 7178647 2313914 9492561 7178500
2314061 9492561 7140701 2351861 9492561
Model 1
df 7 87 94 6 88 94 5 89 94 4 90 94

Mean Square 1025525.428 26596.358 1196441.104 26294.483 1435700.038 26000.685

1785175.138 26131.784
F 38.559
Sig. .000a
45.502
.000b
55.218
.000c
68.314
.000d
a. Predictors: (Constant), BOOKVALU, GROWTH, ROCE, PERATIO, PAYOUT, EPS, DIVIDEND

b. Predictors: (Constant), BOOKVALU, ROCE, PERATIO, PAYOUT, EPS, DIVIDEND c.
Predictors: (Constant), BOOKVALU, ROCE, PERATIO, PAYOUT, EPS d. Predictors:
(Constant), ROCE, PERATIO, PAYOUT, EPS e. Dependent Variable: AVGPRICE
- 77-
Coefficients a Standardi zed Coefficien ts Beta .452 .665 .007 .244 .002 .105 -.081
.452 .665 .006 .245 .105 -.081 .453 .666 .245 .107 -.078 .426 .620 .244 .118
Model 1
(Constant) PAYOUT EPS DIVIDEND PERATIO GROWTH ROCE BOOKVALU (Constant) PAYOUT EPS
DIVIDEND PERATIO ROCE BOOKVALU (Constant) PAYOUT EPS PERATIO ROCE BOOKVALU
(Constant) PAYOUT EPS PERATIO ROCE
Unstandardized Coefficients B Std. Error -198.132 94.480 11.809 1.769 13.154 1.540
3.046E-02 .390 5.723 1.425 2.965E-02 .863 2.375 1.656 -47.306 45.133 -197.778
93.381 11.802 1.745 13.152 1.530 2.872E-02 .385 5.728 1.408 2.376 1.646 -47.181
44.729 -201.364 79.619 11.836 1.676 13.167 1.509 5.724 1.399 2.423 1.509 -45.404
37.657 -282.541 42.608 11.131 1.575 12.271 1.317 5.713 1.402 2.659 1.500
t -2.097 6.676 8.541 .078 4.015 .034 1.434 -1.048 -2.118 6.762 8.594 .075 4.069
1.443 -1.055 -2.529 7.060 8.725 4.092 1.606 -1.206 -6.631 7.066 9.317 4.074 1.773
Sig. .039 .000 .000 .938 .000 .973 .155 .297 .037 .000 .000 .941 .000 .152 .294 .
013 .000 .000 .000 .112 .231 .000 .000 .000 .000 .080
Interpretation (PHARMACY INDUSTRY):

PE ratio, EPS and Payout are the significant determinants of share price for
pharmacy industry with positive t- values. . The coefficient of multiple
in the equation could explain 73.7 % variation of the dependent variable share
price. The computed F-value 38.559 is found to be significant at 5% level. The
variables book value is found to be insignificant with negative t-values.
- 78-
CORRELATION MATRIX: TEXTILE

payout 1 70 -.099 .413 70 -.030 .803 70 .022 .854 70 .153 .206 70 -.162 .180 70
-.046 .704 70 eps dividend peratio -.099 -.030 .022 .413 .803 .854 70 70 70 1 .
778** -.113 .000 .353 70 70 70 .778** 1 -.081 .000 .504 70 70 70 -.113 -.081 1 .353
.504 70 70 70 .096 -.058 .206 .430 .631 .087 70 70 70 .664** .546** -.131 .000 .000
.279 70 70 70 .262* .459** -.036 .029 .000 .766 70 70 70 growth .153 .206 70 .096 .
430 70 -.058 .631 70 .206 .087 70 1 70 .064 .599 70 -.071 .561 70 roce bookvalu
-.162 -.046 .180 .704 70 70 .664** .262* .000 .029 70 70 .546** .459** .000 .000 70
70 -.131 -.036 .279 .766 70 70 .064 -.071 .599 .561 70 70 1 -.154 .202 70 70 -.154
1 .202 70 70

Interpretation:
ROCE, Dividend & Book Value at 1% level of significance. Except that no variables
are correlated. Therefore there would not be any problem of multicollinearity
analysis because of linear multiple regression model is being used for the further
analysis to overcome this problem
- 79-
REGRESSION RESULTS TEXTILE INDUSTRY

89.5228 88.8656 88.3641 88.2094
Model 1 2 3 4
R R Square .774a .598 .773b .598 c .772 .596 .769d .591
a. Predictors: (Constant), BOOKVAL, PERATIO, PAYOUT, GROWTH, ROCE, EPS, DIVIDEND b.

Predictors: (Constant), BOOKVAL, PERATIO, PAYOUT, GROWTH, ROCE, EPS c. Predictors:
(Constant), BOOKVAL, PAYOUT, GROWTH, ROCE, EPS d. Predictors: (Constant), BOOKVAL,
GROWTH, ROCE, EPS
ANOVAe Sum of Squares 740358.9 496889.0 1237248 739731.4 497516.4 1237248 737521.9
499726.0 1237248 731489.2 505758.7 1237248
Model 1
df 7 62 69 6 63 69 5 64 69 4 65 69

Mean Square 105765.554 8014.338 123288.572 7897.086 147504.377 7808.218 182872.289

7780.903
F 13.197
Sig. .000a
15.612
.000b
18.891
.000c
23.503
.000d
a. Predictors: (Constant), BOOKVAL, PERATIO, PAYOUT, GROWTH, ROCE, EPS, DIVIDEND b.

Predictors: (Constant), BOOKVAL, PERATIO, PAYOUT, GROWTH, ROCE, EPS c. Predictors:
(Constant), BOOKVAL, PAYOUT, GROWTH, ROCE, EPS d. Predictors: (Constant), BOOKVAL,
GROWTH, ROCE, EPS e. Dependent Variable: AVGPRICE
- 80-
Coefficients a Standardi zed Coefficien ts Beta -.075 .292 .043 .041 .294 -.255 .
558 -.070 .315 .044 .288 -.242 .574 -.072 .313 .298 -.248 .573 .309 .287 -.232 .579
Model 1
PERATIO GROWTH ROCE BOOKVAL (Constant) PAYOUT EPS GROWTH ROCE BOOKVAL (Constant)
EPS GROWTH ROCE BOOKVAL
Unstandardized Coefficients B Std. Error -164.599 64.268 -.114 .129 2.246 1.140 .
197 .705 .121 .245 2.753 .812 -4.895 2.514 131.238 25.896 -171.718 58.583 -.107 .
126 2.419 .952 .128 .242 2.701 .785 -4.654 2.345 134.957 22.062 -168.475 57.933
-.110 .125 2.403 .946 2.792 .762 -4.758 2.323 134.660 21.931 -177.166 56.983
2.373 .944 2.687 .751 -4.452 2.293 136.074 21.833
t -2.561 -.885 1.970 .280 .495 3.389 -1.947 5.068 -2.931 -.853 2.541 .529 3.440
-1.985 6.117 -2.908 -.879 2.540 3.666 -2.048 6.140 -3.109 2.514 3.578 -1.941 6.232
Sig. .013 .380 .053 .781 .622 .001 .056 .000 .005 .397 .014 .599 .001 .052 .000 .
005 .383 .014 .001 .045 .000 .003 .014 .001 .057 .000
Interpretation (TEXTILES INDUSTRY):

EPS, book value and Growth are the significant determinants of share price for
textiles industry with positive t- values. . The coefficient of multiple
in the equation could explain 55.3 % variation of the dependent variable share
price. The computed F-value 13.197 is found to be significant at 5% level. The
variables Dividend, Payout and ROCE are found to be insignificant with negative t-
values.
- 81-
CORRELATION MATRIX: MISCELLANEOUS

Pearson Correlation Sig. (2-tailed) N bookvalu Pearson Correlation Sig. (2-tailed)
N payout 1 70 -.151 .211 70 .276* .021 70 .203 .092 70 -.306* .010 70 .602** .000
70 .087 .476 70 eps -.151 .211 70 1 dividend peratio .276* .203 .021 .092 70 70 .
588** -.167 .000 .167 70 70 70 .588** 1 -.061 .000 .617 70 70 70 -.167 -.061 1 .167
.617 70 70 70 .192 .069 -.062 .111 .573 .612 70 70 70 .104 .166 .219 .391 .170 .068
70 70 70 .480** .268* -.021 .000 .025 .865 70 70 70 growth -.306* .010 70 .192 .111
70 .069 .573 70 -.062 .612 70 1 70 -.061 .618 70 -.018 .881 70 roce bookvalu .602**
.087 .000 .476 70 70 .104 .480** .391 .000 70 70 .166 .268* .170 .025 70 70 .219
-.021 .068 .865 70 70 -.061 -.018 .618 .881 70 70 1 .053 .664 70 70 .053 1 .664 70
70

Interpretation:
There is a significant correlation between Dividend & EPS, ROCE, Payout & Book
Value at 1% level of significance. Except that no other variables are correlated.
There would not be any problem of multicollinearity because of linear multiple
regression model being used for the further analysis.
- 82-
REGRESSION RESULTS MISCELLANEOUS INDUSTRY

385.4094 382.3881 382.8139 382.6930 382.4791
Model 1 2 3 4 5
R .641a .641b .633c .626d .619e
R Square .411 .411 .401 .392 .383
a. Predictors: (Constant), BOOKVALU, GROWTH, PERATIO, ROCE, DIVIDEND, PAYOUT, EPS

b. Predictors: (Constant), BOOKVALU, GROWTH, PERATIO, ROCE, PAYOUT, EPS c.
Predictors: (Constant), BOOKVALU, PERATIO, ROCE, PAYOUT, EPS d. Predictors:
(Constant), BOOKVALU, PERATIO, ROCE, EPS e. Predictors: (Constant), PERATIO, ROCE,
EPS
9378974 15644788 6125285 9519503 15644788 5989631 9655157 15644788
Model 1
df 7 62 69 6 63 69 5 64 69 4 65 69 3 66 69

Mean Square 919326.250 148540.390 1072147.533 146220.679 1253162.829 146546.466

1531321.132 146453.899 1996543.573 146290.261
F 6.189
Sig. .000a
7.332
.000b
8.551
.000c
10.456
.000d
13.648
.000e
a. Predictors: (Constant), BOOKVALU, GROWTH, PERATIO, ROCE, DIVIDEND, PAYOUT, EPS
b. Predictors: (Constant), BOOKVALU, GROWTH, PERATIO, ROCE, PAYOUT, EPS c.
Predictors: (Constant), BOOKVALU, PERATIO, ROCE, PAYOUT, EPS d. Predictors:
(Constant), BOOKVALU, PERATIO, ROCE, EPS e. Predictors: (Constant), PERATIO, ROCE,
EPS f. Dependent Variable: AVGPRICE
- 83-
a
Coefficients
Model 1
(Constant) PAYOUT EPS DIVIDEND PERATIO GROWTH ROCE BOOKVALU (Constant) PAYOUT EPS
PERATIO GROWTH ROCE BOOKVALU (Constant) PAYOUT EPS PERATIO ROCE BOOKVALU (Constant)
EPS PERATIO ROCE BOOKVALU (Constant) EPS PERATIO ROCE
Unstandardized Coefficients B Std. Error -149.592 218.262 -3.410 3.430 5.181 2.208
-2.28E-02 .180 7.168 2.354 -2.230 2.145 6.294 2.322 85.033 80.696 -145.408 214.073
-3.632 2.926 4.998 1.660 7.166 2.336 -2.261 2.115 6.370 2.227 86.574 79.153
-217.989 203.245 -2.753 2.812 4.761 1.647 7.153 2.338 6.092 2.214 91.923 79.083
-238.084 202.143 5.299 1.552 7.095 2.337 4.739 1.730 74.028 76.918 -65.329 92.908
6.018 1.359 7.253 2.330 4.717 1.728
Standardi zed Coefficien ts Beta -.157 .378 -.018 .311 -.110 .365 .122 -.167 .365 .
311 -.111 .369 .124 -.127 .347 .310 .353 .132 .386 .308 .275 .106 .439 .315 .273
t -.685 -.994 2.347 -.127 3.045 -1.040 2.711 1.054 -.679 -1.241 3.011 3.068 -1.069
2.861 1.094 -1.073 -.979 2.891 3.059 2.752 1.162 -1.178 3.415 3.036 2.740 .962
-.703 4.427 3.113 2.729
Sig. .496 .324 .022 .899 .003 .303 .009 .296 .499 .219 .004 .003 .289 .006 .278 .
288 .331 .005 .003 .008 .249 .243 .001 .003 .008 .339 .484 .000 .003 .008
Interpretation (MISCELLANEOUS INDUSTRY):

EPS, PE ratio and ROCE are the significant determinants of share price for textiles
industry with positive t- values. The coefficient of multiple determination, (R2),
explain 35.5 % variation of the dependent variable share price. The computed F-
value 6.819 is found to be significant at 5% level. The variables Dividend, Payout
and Growth are found to be insignificant with negative t-values.
- 84-
CORRELATION MATRIX: AGGREGATE OF ALL INDUSTIES

Correlations payout Pearson Correla Sig. (2-tailed) N eps Pearson Correla Sig. (2-
tailed) N dividend Pearson Correla Sig. (2-tailed) N peratio Pearson Correla Sig.
(2-tailed) N growth Pearson Correla Sig. (2-tailed) N roce Pearson Correla Sig. (2-
tailed) N bookval Pearson Correla Sig. (2-tailed) N payout 1 435 -.048 .314 435 .
044 .365 435 .133** .006 435 -.040 .402 435 .004 .931 435 .019 .693 435 eps
dividend peratio growth -.048 .044 .133** -.040 .314 .365 .006 .402 435 435 435 435
1 .192** -.045 .044 .000 .347 .361 435 435 435 435 .192** 1 .003 .040 .000 .958 .
405 435 435 435 435 -.045 .003 1 .105* .347 .958 .028 435 435 435 435 .044 .040 .
105* 1 .361 .405 .028 435 435 435 435 .081 .289** .020 .046 .093 .000 .670 .342 435
435 435 435 .107* .370** .051 .026 .025 .000 .290 .585 435 435 435 435 roce bookval
.004 .019 .931 .693 435 435 .081 .107* .093 .025 435 435 .289** .370** .000 .000
435 435 .020 .051 .670 .290 435 435 .046 .026 .342 .585 435 435 1 .202** .000 435
435 .202** 1 .000 435 435
**.Correlation is significant at the 0.01 level (2-tailed). *.Correlation is

Interpretation:
There is a significant correlation between Dividend & Book Value at 1% level of
significance. Except that no other variables are correlated. There would not be any
problem of multicollinearity analysis because of linear multiple regression model
being used for the further analysis.
- 85-
REGRESSION RESULTS AGGREGATE INDUSTRY
289.7461 289.6770
Model 1 2 3
R R Square .583a .339 .582b .339 .581c .338
a. Predictors: (Constant), BOOKVAL, PAYOUT, GROWTH, EPS, PERATIO, ROCE, DIVIDEND b.

Predictors: (Constant), BOOKVAL, PAYOUT, EPS, PERATIO, ROCE, DIVIDEND c.
Predictors: (Constant), BOOKVAL, EPS, PERATIO, ROCE, DIVIDEND
ANOVAd Sum of Squares 18454963 35928266 54383229 18451440 35931789 54383229

18384641 35998588 54383229
Model 1
df 7 427 434 6 428 434 5 429 434
Mean Square 2636423.250 84141.139 3075239.959 83952.778 3676928.153 83912.793
F 31.333
Sig. .000a
36.631
.000b
43.818
.000c
a. Predictors: (Constant), BOOKVAL, PAYOUT, GROWTH, EPS, PERATIO, ROCE, DIVIDEND b.

Predictors: (Constant), BOOKVAL, PAYOUT, EPS, PERATIO, ROCE, DIVIDEND c.
Predictors: (Constant), BOOKVAL, EPS, PERATIO, ROCE, DIVIDEND d. Dependent
Variable: AVGPRICE
- 86-
Coefficientsa Standardi zed Coefficien ts Beta -.036 .066 .132 .174 -.008 .248 .349
-.035 .066 .132 .173 .247 .349 .067 .130 .169 .248 .349
Model 1
DIVIDEND PERATIO ROCE BOOKVAL (Constant) EPS DIVIDEND PERATIO ROCE BOOKVAL
Unstandardized Coefficients B Std. Error -360.676 54.144 -.250 .277 .271 .165 .
279 .093 2.040 .469 -.111 .541 5.552 .928 191.844 23.455 -362.254 53.532 -.247 .277
.269 .165 .279 .093 2.030 .466 5.546 .926 191.836 23.428 -369.038 52.976 .277 .
165 .275 .093 1.975 .462 5.555 .926 191.853 23.423
t -6.661 -.901 1.636 2.990 4.349 -.205 5.986 8.179 -6.767 -.892 1.632 2.989 4.358
5.989 8.188 -6.966 1.681 2.949 4.279 6.000 8.191
Sig. .000 .368 .102 .003 .000 .838 .000 .000 .000 .373 .103 .003 .000 .000 .000 .
000 .094 .003 .000 .000 .000
Excluded Variablesc Collinearit y Statistics Tolerance .982 .985 .978
Model 2 3
GROWTH GROWTH PAYOUT
Beta In -.008a -.006b -.035b
t -.205 -.156 -.892
Sig. .838 .876 .373
Partial Correlation -.010 -.008 -.043
a. Predictors in the Model: (Constant), BOOKVAL, PAYOUT, EPS, PERATIO, ROCE,

DIVIDEND b. Predictors in the Model: (Constant), BOOKVAL, EPS, PERATIO, ROCE,
DIVIDEND c. Dependent Variable: AVGPRICE
- 87-
INTERPRETATION OF REGRESSION RESULTS: YEAR-WISE Table 3

Year 2002 2003 2004 2005 2006 Payout EPS DIV P/E R ROCE Growth BV Adj r 2 .662 .475
.451 .459 .756 FValue 35.639 20.489 24.570 15.607 89.821
N N N N Y
Y
Y N Y Y
Y N N N N
Y N Y N Y
Y Y Y Y N
N N N N N
Y Y Y Y Y
Y *significant determinant N *not significant determinant INTERPRETATION:

The regression analysis for aggregate of industries for all the year, clearly
depicts Book value, ROCE and EPS are the most important determinants of market
price among the among all the variables with a high positive values at 1 % level of
significance. At the same time there is a positive significant relationship between
PE ratio and market price of share at 5% level of significance. Where as Dividend
Per Share, Payout ratio and Growth remains insignificant with a negative values.
They do not have any influence on the market share price.
- 88-
INTERPRETATION OF REGRESSION RESULTS: INDUSTRY WISE Table 4

Industry Payo ut EPS Y Y N Y Y Y DIV Y Y Y N N N P/E R Y N Y Y N Y ROCE N N N N N Y
Growt BV h N N N N Y N N N N N Y N AdjR
2
Fvalue 104.63 6 10.574 6.606 66.314 23.503 13.648
Automobile N Cements Chemical Pharmacy Textiles N N Y N
.897 .310 .132 .541 .566 .345
Miscellaneo N us
Y *significant determinant N *not significant determinant INTERPRETATION:

The regression analysis for various industries in aggregate depicts that there
earnings per share(EPS) and price earning ratio(P/E R) are the significant
determinants of equity share price with highly positive t – values. Dividend is
significant at a low positive tvalue. Where as Book value (BV), Growth (G), Return
on Capital Employed (ROCE) and Payout has no any influence on the market share
price. They are insignificant with negative t-values. Except for automobile
industry, the R2 ranges from 13.2% to 56.6%. it means less than 56% of variation in
dependent variable is explained by the independent variables.
- 89-
CHAPTER V
CONCLUSION
- 90-
CONCLUSION
The present study attempts to examine the empirical relationship of explanatory
variables namely, dividend per share, earning per share , price earning ratio, book
value, return on capital employed, growth and payout ratio on market price of
shares from the year 2002 to 2006 in the post reform era of liberalization. The
relationship between independent variables and dependent variable of 87 companies
(randomly selected) of six industries are studied. The results reveal that Earnings
Per Share is the only determinant which is common in both the analysis (year wise
and industry wise). Therefore EPS is an important determinant of share price. If
look particularly into the year wise analysis- Book value also influences the share
price. And looking into industry wise it is found that Price earning ratio also
influences significantly on the dependent variable. The other independent variables
like Return on capital employed and dividend per share remain insignificant but
with a positive value. They are not significant determinants of share price. The
regression analysis clearly depicts that Growth and payout remains most
insignificant determinant with negative value. They do not have any influence on
the share price. Overall the R2 ranges from 13 % to 56 % (except for automobile
industry). It means less than 50 % of variation in dependent variable is explained
by these independent variables. Finally it can be concluded that apart from the
above independent variables there are some other factors which influences the
market price of the share. Those factors may be macroeconomic factors like
government policy, federal bank policy, central bank interest rates, business
cycle, demand and supply shocks, GDP, inflation, exchange rates. Etc.
- 91-
CHAPTER V1 BIBLIOGRAPHY
& ANNEXTURES
- 92-
Bibliography
Journal References: ⇒ Shefali Sharma & Balwinder, (2006),”Determinants of equity
share prices in the Indian corporate sector”, The ICFAI Journal of applied finance,
Vol. 12 No.4 pp 21-31. ⇒ Monica Singania (2006), “Determinants of equity prices: a
study of select Indian companies”, The ICFAI Journal of applied finance, Vol.12,
No.9 pp 39-50. ⇒ Subir Sen, Rajendra Ray (2003), “Key determinants of stock prices
in India”, The ICFAI Journal of applied finance, Vol. 9, No.7 pp 35-40. ⇒ A. James
Heins; Stephen L. Alison(1966), “Some factors affecting stock price variability”,
The Journal of Business, vol. 39, No. 1, pp. 19-23 ⇒ James L. Bickler (1969),
“Empirical tests of the compatibility of selected equity share price equations with
a Descriptive model, The Journal of applied finance, Vol. 24, No.1pp 106-108. Books
Referred: Investments- Bodie, Kane, Marcus Modern Portfolio Theory And Investment
Analysis- Elton & Gruber Security Analysis And Portfolio Management - Prasanna
Chandra Econometrics – Ashwath Damodaran Statistics- S.C Gupta
- 93-
Software Used:
⇒ Prowess ⇒ Capitaline ⇒ SPSS 10 ⇒ MS Excel
WEBLIOGRAPHY:
⇒ www.jstor.org ⇒ www.nseindia.com ⇒ www.icfaipress.org ⇒ www.bseindia.com ⇒
www.capitaline.com
- 94-
ANNEXTURES
Table 5: LIST OF THE COMPANIES UNDER THE STUDY
IP RINGS LTD HI-TECH GEARS LTD MENON PISTONS LTD SAMKRG PISTONS & RINGS LTD UCAL
FUEL SYSTEMS LTD SWARAJ MAZDA LTD ASHOK LEYLAND LTD BAJAJ AUTO LTD MAHINDRA &
MAHINDRA LTD PUNJAB TRACTORS LTD VST TILLERS TRACTORS LTD LUMAX INDUSTRIES LTD
DEEPAK NITRITE LTD THIRUMALAI CHEMICALS CIBA SPECIALITY CHEMICALS INDIAN HUMPE PIPE
LINE COMPANY LTD INDIA GLYCOLS LTD AARTI INDUSTRIES LTD ALKYL AMINES CHEMICALS LTD
TANFAC INDUSTRIES LTD HIKAL LTD PIDILITE INDUSTRIES LTD PUNJAB CHEMICALS & CROP
PROTECTION LTD SRF POLYMERS LTD GODREJ INDUSTRIES LTD JAYANT AGRO ORGANICS LTD
CLARIANT CHEMICALS (INDIA) LTD ALCHEMIST LTD CRISIL LTD PANACEA BIOTEC LTD MADRAS
CEMENT LTD SHREE CEMENT LTD EVEREST INDUSTRIES LTD RAMCO INDUSTRIES LTD DALMIA
CEMENTS DECCAN CEMENTS LTD SAGAR CEMENTS LTD OCL INDIA LTD (CEMENTS) HINDUSTAN
SANITARYWARE & INDUSTRIES LTD ORIENT CERAMICS & INDUSTRIES LTD KAKATIYA CEMENTS
SUGAR & INDUSTRIES LTD ALPS INDUSTRIES LTD RAYMOND LTD SKY INDUSTRIES LTD
UNIPRODUCTS (INDIA) LTD CHESLIND TEXTILES LTD PATSPIN INDIA LTD EUROTEX INDUSTRIES
AND EXPORTS LTD ADITYA BIRLA NUVO LTD LOYAL TEXTILES MILLS LTD HIMATSINGKA SEIDE
LTD PIONEER EMBROIDERIES LTD CHEVIOT COMPANY LTD DONEAR INDUSTRIES LTD BSL LTD
AARTI DRUGS LTD DIVIS LABORATORIES LTD GRANULES INDIA LTD LUPIN LTD NEULAND
LABORATORIES LTD
- 95-
Continued…..
HINDALCO INDUSTRIES LTD MADRAS ALUMINIUM CO LTD BRITANNIA INDUSTRIES LTD NESTLE
INDIA LTD GRASIM INDUSTRIES LTD ELECTROSTEEL CASTINGS LTD INFOSYS TECHNOLOGIES LTD
APOLLO TYRES LTD LARSEN & TOUBRO LTD BHARAT EARTH MOVERS LTD MANUGRAPH INDIA LTD
ACC AMBUJA CEMENTS LTD SHASUN CHEMICALS & DRUGS LTD SUVEN LIFE SCIENCES LTD WYETH
LTD NOVARTIS INDIA LTD GLAXOSMITHKLINE PHARMA LTD SOLVAY PHARMA INDIA LTD MERCK LTD
THEMIS MEDICARE LTD ALEMBIC LTD CADILA HEALTHCARE LTD DR REDDYS LABORATORIES LTD J
B CHEMICALS & PHARAMACEUTICALS LTD NICHOLAS PIRAMAL INDIA LTD RANBAXY LABORATORIES
LTD
Table 6: NO OF SECTORS AND COMPANIES TAKEN UNDER THE STUDY SECTOR AUTOMOBILES
CEMENTS CHEMICALS PHARMACEUTICALS TEXTILE & COTTON MISCELLANEOUS TOTAL NO. OF
COMPANIES 12 13 15 19 14 14 87
- 96-

Determinants of Equity Share Prices in The Indian Corporate Sector

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Determinants Of Equity Share Prices: An Empirical Study

DETERMINANTS OF EQUITY SHARE PRICES IN THE INDIAN CORPORATE SECTOR : AN EMPIRICAL

MASTERS IN BUSINESS ADMINISTRATION

M.P.BIRLA INSTITUTE OF MANAGEMENT Associate, Bharatiya Vidya Bhavan #43.RACE COURSE

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

DECLARATION & CERTIFICATES

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

I hereby declare that this dissertation entitled “Determinants of Equity Share

Place: Bangalore Date: RAKESH D

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

I hereby certify that this dissertation entitled “Determinants Of Equity Share

Place: Bangalore Date: Dr N.S. MALAVALLI Principal

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

I hereby certify that project work embodied in the dissertation entitled

Place: Bangalore Date: Prof. Dr: T. V. N RAO

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

encouragement and guidance in the course of the research investigation.

RAKESH D (Reg No. 05XQCM6070)

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

INDEX CONTENT PAGE NO EXECUTIVE SUMMARY…………………………………………..10 CHAPTER 1: INTRODUCTION

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

CHAPTER 6: BIBILOGRAPHY & ANNEXURES………….…….92 Table 1: list of sectors included in

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Following are some International factors relevant to firm’s performance:

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

PAPER I: DETERMIINANTS OF EQUITY SHARE PRICES IN THE INDIAN CORPORATE SECTOR:

Database and Research Methodology

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Sample and Period of Study

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Company Performance Variables and equity share prices

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Numbers of Equity Shares Outstanding

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Total Dividend to equity shareholders

Total Net Profit belonging to Equity shareholders Or = Dividend per share /

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

PAPER 2 DETERMINANTS OF STOCK PRICES IN INDIA Subir Sen, Rajkumar Ray

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

PAPER 3. DETERMINANTS OF EQUITY PRICES: A STUDY OF SELECT INDIAN COMPANIES Monica

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Summary and Conclusions

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore

Rakesh D, MBA 2005-07,M.P Birla Institute Of Management, Bangalore