Yahoo Finance Should You Have Prozone Intu Properties Limited’s (NSE:PROZONINTU) In Your Portfolio?
If you are a shareholder in Prozone Intu Properties Limited’s (NSEI:PROZONINTU), or are thinking about investing in the company, knowing how it contributes to the risk and reward profile of your portfolio is important. The beta measures PROZONINTU’s exposure to the wider market risk, which reflects changes in economic and political factors. Not every stock is exposed to the same level of market risk, and the market as a whole represents a beta value of one. Any stock with a beta of greater than one is considered more volatile than the market, and those with a beta less than one is generally less volatile.
Check out our latest analysis for Prozone Intu Properties
What is PROZONINTU’s market risk?
Prozone Intu Properties’s beta of 0.56 indicates that the stock value will be less variable compared to the whole stock market. This means the stock is more defensive against the ups and downs of a stock market, moving by less than the entire market index in times of change. PROZONINTU’s beta implies it may be a stock that investors with high-beta portfolios might find relevant if they wanted to reduce their exposure to market risk, especially during times of downturns.
Does PROZONINTU’s size and industry impact the expected beta?
PROZONINTU, with its market capitalisation of ₹7.49B, is a small-cap stock, which generally have higher beta than similar companies of larger size. Furthermore, the company operates in the real estate industry, which has been found to have high sensitivity to market-wide shocks. As a result, we should expect a high beta for the small-cap PROZONINTU but a low beta for the real estate industry. This is an interesting conclusion, since both PROZONINTU’s size and industry indicates the stock should have a higher beta than it currently has. A potential driver of this variance can be a fundamental factor, which we will take a look at next.
How PROZONINTU’s assets could affect its beta
During times of economic downturn, low demand may cause companies to readjust production of their goods and services. It is more difficult for companies to lower their cost, if the majority of these costs are generated by fixed assets. Therefore, this is a type of risk which is associated with higher beta. I test PROZONINTU’s ratio of fixed assets to total assets in order to determine how high the risk is associated with this type of constraint. Considering fixed assets account for less than a third of the company’s overall assets, PROZONINTU seems to have a smaller dependency on fixed costs to generate revenue. As a result, the company may be less volatile relative to broad market movements, compared to a company of similar size but higher proportion of fixed assets. Similarly, PROZONINTU’s beta value conveys the same message.
What this means for you:
You may reap the benefit of muted movements during times of economic decline by holding onto PROZONINTU. Its low fixed cost also means that, in terms of operating leverage, its costs are relatively malleable to preserve margins. In order to fully understand whether PROZONINTU is a good investment for you, we also need to consider important company-specific fundamentals such as Prozone Intu Properties’s financial health and performance track record. I urge you to complete your research by taking a look at the following:
Financial Health: Is PROZONINTU’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Past Track Record: Has PROZONINTU been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of PROZONINTU’s historicals for more clarity.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
