AnEmpirical Investigation into the Quantitative Impact of Profitability and Leverage (EPS, ROE, D/A) on Automobile Stock Prices in India

Abstract

The Indian automobile sector, a significant
growth engine for the national economy, is
inherently defined by its high capital intensity
and acute susceptibility to global and domestic
economic cycles. This study undertakes a
rigorous empirical investigation to quantify
the specific influence of three critical intrinsic
financial factors—Earnings Per Share (EPS),
Return on Equity (ROE), and Debt to Asset
Ratio (D/A Ratio)—on the Stock Market
Prices of a selected sample of leading Indian
automobile companies listed on the BSE and
NSE. Employing multivariate regression
analysis and correlation modeling over a
defined historical period, the research aims to
establish the statistical significance and precise
elasticity of these relationships. The core
hypothesis, rooted in neoclassical financial
theory, anticipates a strong, statistically
significant positive correlation .