UNITECH LTD.INDUSTRY: CONSTRUCTION HOUSING LARGE
Company Background :
Unitech Limited is a real estate developer in India. It has six
segments: real estate, construction, transmission towers,
consultancy, hospitality and others. The business operations of the
Company consists of construction, contracts, development of real
estate, consultancy and management services, hotels, manufacturing
of power transmission and telecom towers. The construction
activities include construction contracts of highways, roads,
powerhouses, manufacturing of transmission lines, refineries and
various types of other buildings/structures. Real Estate
Development includes development of mini cities/ townships
construction of residential and commercial complexes. Consultancy
and management services include overseeing of project execution,
marketing of real estate ventures for associates and joint
ventures. The manufacturing of power transmission and telecom
towers in India is carried out through a subsidiary, Unitech Power
Transmission Ltd.
Company Profile:
Incorporation Year
1971
Chairman
Ramesh Chandra
Managing Director
Sanjay Chandra
Company Secretary
Deepak Jain
Auditor
GoelGarg& Co
Registered Office
6 Community Centre,Saket,New Delhi,110017,New Delhi
Telephone
91-11-41664040/26857331/26857330
Fax
91-11-26857338
E-mail
[email protected]
Website
http://www.unitechgroup.com
Face Value (Rs)
2
BSE Code
507878
BSE Group
A
NSE Code
UNITECH
Bloomberg
UT IN
Reuters
UNTE.BO
ISIN Demat
INE694A01020
Market Lot
1
Listing
Mumbai, NSE
Financial Year End
03
Book Closure Month
Aug
AGM Month
Sep
Research Motive: To find whether the stock price of Unitech ltd
is significantly affected by
1. Market News and/or
2. Budget Policy
Hypothesis Formulation: H0 There is no significant effect of
market news and budget policies on the stock price of Unitech.
Methodology: Past one month stock price of Unitech ltd has been
analyzed vis-a-vis the market news and budget policy.Data source:
The share price data has been obtained from Capital line software.
Whereas, major market news during this period were as follows 1.
March 30, 2012 Indian developer Unitech ltd. moved court seeking to
prevent partner Telenor ASA, of Norway, from entering into any
competing business or transferring their telecom joint venture into
a new business entity. The move was aimed at protecting Unitechs
investment in telecom business. Through its units Unitech owns
about 33% of Unitech wireless ltd which provides telecom services
through Uninor. Telenor owns the rest. Since, the dispute between
the two parties had been simmering for quite some time it would be
interesting to observe how investors reacted to this news which
implies legal hassles for this colossal real-estate company in the
near future.2. March 16, 2012 Budget 2012: Real estate welcomes
initiatives to boost growth of industry
For thereal estatesector, this Budget has exceeded expectations,
given the pressure on the fiscal situation. Most importantly, it
has taken into account the crying need to focus onaffordable
housingby allowing external commercial borrowing (ECB) for low cost
housing, roads, and construction. Withholding tax on ECB for
affordable housing has been reduced from 20 percent to five percent
for three years. This will help ease the liquidity situation in the
sector. Another facet of our research deals with gauging the effect
of budgetary policies on Unitechs stock price3. March 12, 2012
Unitech eyes Rs 250 cr sales realization from Bangalore project
Real estatemajor Unitech said it eyes a sales realization of
about Rs 250 crore over two years from the luxury housing project
in Bangalore.The company announced the launch of itsluxury villas
project'Aranya'. It plans to develop 68 villas in the 15-acre
project. The villas sizes range from 4,319-7,000 sq ft.This
information resulted in creating a positive sentiment regarding the
company in the market; well try and find out whether or not it
resulted in higher stock price. Table 1: Share price of Unitech
ltd. on BSE over a 33 day period from 01/03/2012 to
03/04/2012.Date
Open Price
High Price
Low Price
Close Price
3/4/2012
29.45
30.4
29.45
30.2
2/4/2012
29
29.45
28.65
29.2
30/3/2012
27.8
29
27.65
28.75
29/3/2012
27.25
27.5
26.8
27.35
28/03/2012
28.5
28.7
27.65
27.8
27/3/2012
28.8
29.75
28.4
28.8
26/3/2012
29.55
30.1
28.2
28.3
23/3/2012
28.5
30.3
28.1
29.75
22/3/2012
30.4
30.8
27.85
28.3
21/3/2012
29.5
30.7
28.35
30.35
20/3/2012
27.75
29.35
27.6
28.9
19/3/2012
29.5
29.65
27.45
27.75
16/3/2012
29.85
30.75
29.05
29.35
15/3/2012
30.85
30.85
29.5
29.85
14/3/2012
32
32.05
30.55
30.85
13/3/2012
30.65
31.3
30.6
31.1
12/3/2012
30.25
31.35
29.9
30.25
9/3/2012
29.05
30.45
29.05
30.25
7/3/2012
27.25
29.1
26.8
28.6
6/3/2012
29.6
30.9
26.1
27.25
5/3/2012
31
31
29.5
29.65
3/3/2012
31.5
31.6
30.7
31
2/3/2012
32.2
33.2
31
31.45
1/3/2012
32.1
32.45
30.1
31.85
Analysis:1. Scrutiny of the results of the news on March 30,
2012 according to which Unitech moved court against Telenor.
Although there was a lot of negative sentiment in the market due
to impending legal hassle in which Unitech got involved but this
wasnt transmitted into a fall in the market price of the share in
fact there was a slight increase in the share value. The value of
the share moved from 28.75 to 30.2.Thus, objectively it can be
stated that this news didnt affect the companys image and had no
bearing what so ever on the market price of the share. It is hard
to account for the factors which might have led to the increase in
share price over the next two days or the penultimate and the
ultimate day of our consideration period.2. Effect of Budget: The
budget brought much needed respite for the recession hit real
estate sector which was in fact in a dire need of an impetus. This
years Union budget has attempted to provide a fillip to the real
estate sector. But a glance at share market prices suggests
something to the contrary. From March 16, onwards the share price
of Unitech didnt follow any trend dipping, rising and again
falling. Thus, after the declaration of the Union Budget the share
price of Unitech showed unpredictable movement and no trend could
be discerned. This once again proves that the share prices are
determined from a whole gamut of factors and the effect of a single
factor, in isolation, on the stock price is not visible. 3.
Aftermath of issuing a statement regarding gains in future: It
seems that the market responded positively to the statement issued
by Unitech on 12 March, 2012. According to the press statement
Unitech stated that it expected a future profit of Rs. 250 crores
over the next two years from sales of its Banglore project. The
project, Aranya, basically consisted of building luxury villas over
15 acre land. It seems that this news was well received by the
investor fraternity as it resulted in an increase in stock prices
the very next day. This positive piece of information seems to have
swayed investor opinion in favor of Unitech as good investing
option for the future. But this positive sentiment couldnt be
sustained for long and the vagaries of stock market took over the
day after resulting in a decline in share value of the company.
Thus, an instant positive impact of this news was
observedConclusion: Due to lack of proper evidence, no considerable
relation between market news and share price of Unitech could be
established. Also, there was no observable trend in change in share
price due to the Union Budget. This may be because of the limited
scope of this research and our inability to consider simultaneously
all the factors affecting share price of a company.Result: Our null
hypothesis has been accepted there is no significant correlation
between share price of Unitech and (i) Market News; (ii)
Budget.
