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
Chairman
Managing Director
Company Secretary
Auditor
Registered Office
Telephone
Fax
E-mail
Website
Face Value (Rs)
BSE Code
BSE Group
NSE Code
Bloomberg
Reuters
ISIN Demat
Market Lot
Listing
Financial Year End
Book Closure Month
AGM Month

1971
Ramesh Chandra
Sanjay Chandra
Deepak Jain
GoelGarg& Co
6 Community Centre,
Saket,
New Delhi, 110017, New Delhi
91-11-41664040/26857331/26857330
91-11-26857338
feedback@unitechgroup.com
http://www.unitechgroup.com
2
507878
A
UNITECH
UT IN
UNTE.BO
INE694A01020
1
Mumbai, NSE
03
Aug
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 the real estate sector, this Budget has exceeded expectations, given the pressure on the fiscal situation.
Most importantly, it has taken into account the crying need to focus on affordable housing by 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 price

3.

March 12, 2012 Unitech eyes Rs 250 cr sales realization from Bangalore project
Real estate major 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 its luxury 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

3/4/2012

30.4

2/4/2012

29.4
5
29

30/3/2012

27.8

29/3/2012

27.2
5

27.5

26.8

27.3
5

28/03/201
2

28.5

28.7

27.6
5

27.8

27/3/2012

28.8

29.7
5

28.4

28.8

26/3/2012

29.5
5

30.1

28.2

28.3

23/3/2012

28.5

30.3

28.1

29.7
5

22/3/2012

30.4

30.8

27.8
5

28.3

21/3/2012

29.5

30.7

28.3
5

30.3
5

20/3/2012

27.7
5

29.3
5

27.6

28.9

19/3/2012

29.5

29.6
5

27.4
5

27.7
5

16/3/2012

29.8
5

30.7
5

29.0
5

29.3
5

15/3/2012

30.8
5

30.8
5

29.5

29.8
5

14/3/2012

32

32.0
5

30.5
5

30.8
5

13/3/2012

30.6
5

31.3

30.6

31.1

12/3/2012

31.3
5
30.4
5
29.1

29.9

30.2
5
30.2
5
28.6

6/3/2012

30.2
5
29.0
5
27.2
5
29.6

30.9

26.1

5/3/2012

31

31

29.5

9/3/2012
7/3/2012

29.4
5
29

Clos
e
Price
29.4
5
28.6
5
27.6
5

29.0
5
26.8

30.2
29.2
28.7
5

27.2
5
29.6
5

3/3/2012
2/3/2012

Analysis:

1.

31.5
32.2

31.6
33.2

30.7
31

31
31.4
5

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
observed

Conclusion: 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.