NAME – ADITYA GOVANDE
SAPID – 80012100566
DIVISION A
Relation between NIFTY and Aditya Birla Capital
Introduction:
Aditya Birla Capital Limited (ABCL) is the holding company of all the financial services businesses of the Aditya Birla Group. Through its subsidiaries and joint ventures, it manages aggregate assets worth more than Rs3000 billion and has a lending book of Rs601 billion (including housing) as of December 31, 2019. ABCL is among the top five private diversified NBFCs in India. It is also one of the largest private life insurance companies, asset management companies and general insurance brokers in the country. The company has undertaken various internal and external sustainability efforts to be a sustainability leader in its sector.
Financials of Aditya Birla Capital Limited:
• Net Interest Income (NII) at Rs 5801.67 crore in December 2021 up 1.15% from Rs. 5031.97 crore in December 2020.
• Quarterly Net Profit at Rs.520.21 crore in December 2021 up 13.78% from Rs. 377.34 crore in December 2020.
• Operating Profit stands at Rs. 73.03 crore in December 2021 up 2.44% from Rs. 29.85 crore in December 2020.
• Aditya Birla Capital EPS has increased to Rs. 0.30 in December 2021 from Rs. 0.13 in December 2020.
• Aditya Birla Capital shares closed at 109.85 on February 07, 2022 (NSE) and have given 5% returns over the last 6 months and 12.04% over the last 12 months.
Objective:
To calculate the Beta value and find its significance.
Data collection:
The data was gathered from a secondary source, the NSE’s official website. Data on the NSE’s daily closing stock price and Aditya Birla Capital has been gathered. The data has been narrowed down to the weekend (Friday) closing price only.
Data Analysis:
Regression Equation:
Weekly returns of Aditya Birla Capital:0.98833955 + 0.030720247(Nifty)
Regression Statistics
Multiple R 0.54904915345
R Square 0.301454972
Adjusted R Square 0.28593175
Standard Error 4.814941926
Observations 47
Interpretations:
Here, we can observe that the R square value is 0.30145497, meaning that the 30.1% of weekly returns of Aditya Birla Capital can be explained by Nifty, which is comparatively higher than most industry trends.We can conclude that Aitya Birla Capital does follows the Nifty trend.
ANOVA
df SS MS F Significance F
Regression 1 450.2178 450.2178 19.4196 0.000064320716
Residual 45 1043.26495921 23.18366
Total 46 1493.482765
Interpretations:
H0: Nifty is not influencing the weekly returns of Aditya Birla Capital
H1: Nifty is influencing the weekly returns of Aditya Birla Capital
Here as the F value is 19.4196 which is more than 4, thus we reject the null hypothesis and accept the alternate hypothesis, concluding that nifty is influencing the weekly returns of Aditya Birla Capital.
Also, the Significance F value is 0.000064320716 which is less than .025 thus the model is significant.
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept -0.750708 0.706072 -1.06321 0.29335 2.172 4.8 2.17 0.671
Returns 0.0087387 0.0019830 4.406 0.00006 0.0047 0.012 0.04 0.012
Interpretations:
We can observe here that the Beta value is 0.0087387meaning that 1 unit change in Nifty leads to 0.0087387 change in weekly returns of Aditya Birla Capital. Also, the value of beta is positive indicating the presence of a positive relationship between the two variables.
P value is 0.00006432071which is less than .05 thus the model is significant at 95% confidence interval.