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Abhishek Jha
Gaurav Aggarwal
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Gaurav Aggarwal
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World Journal of Economic and Finance

Estimation of Beta values of Indian power generation projects

Abhishek Jha1*, Gaurav Aggarwal2

1*,2 Dr. APJ Abdul Kalam Technical University, Lucknow, UP, India.

Accepted 15 January, 2016

Citation: Jha A, Aggarwal G (2016). Estimation of Beta values of Indian power generation projects. World Journal of Economic and Finance. 2(1): 021-045.

Copyright: © 2016. Jha A, Aggarwal G. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are cited.

Abstract

In this paper, a fuzzy logic based application tool has been developed for power plant project’s systematic risk assessment and expert judgments have been used to design it. The application tool for systematic risk analysis involves a decision making approach which provides a flexible and easily understood way to analyze systematic risks of projects. The systematic risks, which are deeply influenced by the market scenarios, have been considered in the model. The relative importance (impact) of risk factors was determined from the survey results. The survey was completed with the experts that have experience in various power projects. The proposed risk analysis will give investors a more rational basis on which to make decisions. Furthermore, an effort has been made to determine Beta of a power project by estimating other factors related with the project such as Estimated Systematic Risk Factor (Determined by Fuzzy Logic), Debt Equity Ratio, 5 year Net Profit Margin, 5 year Sales Growth Rate, Interest Coverage Ratio and Annual Sales. This would help power projects to determine relevant return on equity required, analyze true NPV of project as well as set accurate Hurdle rate for any new project.

Keywords: Power, Systematic, Fuzzy, Beta, Regression, Heteroskedasticity, Robust