Introduction:
Pidilite Industries Limited is an Indian adhesives manufacturing company based in Andheri (East), Mumbai. The company is the dominant and leading adhesives company in India. Pidilite also manufactures products across verticals such as art materials and stationery; food and fabric care; car products, adhesives, and sealants; and speciality industrial products like adhesives, pigments; textile resins, leather chemicals, and construction chemicals.
Pidilite markets the Fevicol range of adhesives. Its other brands are FeviKwik, Dr. Fixit, Roff, Cyclo, Ranipal, Hobby Ideas, M-seal, and Acron. It also markets and manufactures WD-40 in India.
The company has manufacturing facilities across India including in Mahad (Maharashtra), Vapi (Gujarat), Baddi and Kala Amb (both in Himachal Pradesh). In 2022, Pidilite Industries partnered with 100x.VC.
Objective:
To calculate beta of Pidilite Industries and its significance
Data Collection:
Data of Pidilite Industries from 01-01-2022 to 31-12-2022 was downloaded from the NSE website.
• Friday’s weekly closing prices have been found out.
• Weekly Return have been calculated with the formula of
(Y2-Y1)/Y1*100
• The Weekly Return of Equity has been regressed on the Weekly Return of Nifty
Data Analysis:
Weekly Return of Pidilite Industries = -1453.52 + 0.23 Weekly Return of Nifty
• t-stat = 11.04978704
• R2 = 0.722054327
• F = 122.0977937
• N = 50
The above equation tells us about the relationship between the Weekly Return of Pidilite Industries & Weekly Return of Nifty 50. The negative sign means that there is an inverse relationship. If nifty 50 rises, equity falls and, if nifty 50 falls, equity rises. The co-efficient of the weekly return of nifty is 0.23, which means if nifty rises by 1 unit, Pidilite Industries will fall by 0.23 units and vice versa.
• The number of Observations is 50 and the t-stat is 11.04978704
• The p-value is 0, which is more than 0.05, means that b is statistically insignificant at 5%. Even if it is more than 0.01, b is statistically insignificant at 1%.
• R2 is 0.722054327, which means that 72.20% of Y (Pidilite Industries) is explained by X (nifty), and the balance of 27.80% is error. Error is due to the variables which are not in the model.
• F is 122.09, the P value for which is 0.000180481< 0.01, which means overall the model is statistically significant.
Conclusion:
Since b = 0.22894676 is less than 1, it is statistically insignificant.
Pidilite Industries is not a good option for investment because for every increase in nifty there will an decrease in the equity of Pidilite Industries.
