Event Study

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Event Selected:- Suzlon Completes Acquisition of Martifer Stake in Repower.

Date :- 6th June 2009

Details about the Event:-

· Suzlon now holds 90.72% stake in Repower

· Final 14.4% acquired in two tranches of Euro 87.6 mil each

Ø Reasons why we have choosen this event for our study:-

* This is one of the most important acquisition done by Suzlon recently and it is important to note that it takes 2 years to Suzlon in order to completely aquire Repower.

* After this acquisition the financial results which are announce by Suzlon in June 2009 shows that it revenues increases to 91% so, this shows that how important this acquisition is for Suzlon energy Ltd.

* This is one of the biggest acquisition done by any Indian Wind energy company.

Objectives of this Event Study:-

* To analyze the overall impact of this acquisition on share price of Suzlon through Study:-

* Share price of 15 days prior and 15 days after the acquisition. ( Event Window)

* Share of 200 days prior to Event Window ( Estimation Window)

Hypothesis :-

* Null Hypothesis is that Market is efficient and this announcement of acquisition does not affect the share price of Suzlon energy Limited.

Research Methodology:-

* Research Design: - Descriptive Research

* Data Collection:- Secondary Data

* Data has been collected from website of stock market and following sites:-





In Data collection firstly data of share price of sensex and suzlon is collected of 200 days prior to event window that is 15 days before and after the announcement which is called estimation window and then data is collected of 15 days prior and after the announcement which is called Event window.

Data Interpretation:-

In order to interpret the Data we have used statistical tools like Beta , Intercept , RSQUARE and standard deviation and in order to check the significance of our data we have apply T-stats test to see that whether our set Null hypothesis accepted or rejected.

Data interpreted is shown in the excel sheet attached with this assignment:…….

Results and Findings:-

Ø ALPHA is the intercept of the linear regression relation between return on investment and return on the market portfolio.
The intercept of the Suzlon Energy is- 0.00352, since it is negative So, we can say that fund is not performing well.

Ø BETA is the slope of the linear regression relation between return on investment and return on the market portfolio.

Slope quantifies the steepness of the line. Scientifically it equal the change in Y for each unit change in X.

Slope positive when y increases as x increases

Slope negative when y decreases as x increases

The beta (slope) of Suzlon Energy Limited .69 which depicts that beta is defensive , for example if market falls by 10% or increase 10% , then the market price of Suzlon Energy Ltd. falls by 6 to 7% and vice- versa. Beta is the slope of this line through which we analyze the performance of the price of a company in respect to market.

Ø RSQUARE: RSquare is a fraction between 0.0 to 1.

RSquare = 0. 0.0 means knowing X does not help to predict Y it means no linear relation between X and Y

RSquare = 1 means all point lie exactly on a straight line with no scatter.

The Rsquare of Suzlon . comes out to be 0.111 which shows that the model fit the data imperfectly with the line going right through every data point that means the data of a company is not scattered much from regression line.

Ø Standard error of Suzlon Energy. is 0.0528 which depicts that the data is reliable and the risk is less.

Ø Standard Deviation of Suzlon Energy is 0.044 which means that it is less risky to invest in the security Suzlon Energy LTD. Because higher the S.D. higher the risk is there.


The significance level shows that there is “less or equals to no” impact of the event announcement on the stock prices of the company taken the standard value of + or - 1.96.


Since the CAR is -9.13 which is more than the level of significance ie., + or - 1.96 hence the market is not efficient thereby resulting in rejection of the null hypothesis.

So, in the end we can conclude that the announcement of this acquisition effects the share price of suzlon energy limited.

Graphs :-

Suzlon Returns After Acquisition of Repower:- ( 15 days)

Suzlon Returns Before This Acquisition:- ( 15 Days)


* Prasanna Chandra, Investment and portfolio Management, 2009 edition, Tata McGRAW Hill Publications.

* www.bseindia.com

* http://finance.yahoo.com/q/hp?s=SUZLON.BO&a=05&b=1&c=2008&d=05&e=30&f=2009&g=d

* http://www.suzlon.com/about_suzlon/l3.aspx?l1=1&l2=1&l3=8