Author – Aditya Raj Singh
INTRODUCTION
Aditya Birla Capital Limited is the holding company for the financial services businesses of the Aditya Birla Group.
As of March 31st, 2020, Aditya Birla Capital Limited manages an aggregate AUM over Rs. 3000 billion
The subsidiaries of ABCL have a nationwide reach with 850+ branches and more than 2,00,000 agents/channel partners and several bank partners
OBJECTIVE
To calculate the beta of the company and find its significance
VIEWS BY MOTILAL OSWAL
Aditya Birla Capital (ABCAP) reported a 26% YoY decline in PAT to INR2.0b, largely driven by ~50% decline in PBT to INR2.2b for the lending businesses. In the NBFC segment, the quarter was characterized by the continued run-down of loans (especially wholesale lending) and INR500m COVID-19- related provisions. In the AMC segment, PAT was largely stable sequentially despite a 14% QoQ decline in AAUM. The Life Insurance segment reported 5% YoY growth in individual first-year premium (FYP), compared with a 23% YoY decline for the industry. We expect the company to focus on strengthening the balance sheet, liquidity, and cost-cutting. While profits in the Lending segment would remain muted in FY21, they would be compensated by better performance in other segments. Maintain Buy, with TP of INR86 (FY22E SOTP-based).
DATA COLLECTION
Data of index and equity were collected from https://www1.nseindia.com/ and https://www.nseindia.com/ respectively. Daily returns from 1st March-2021 to 28 Feb-2022 were downloaded in excel format from these websites and it was sorted into a weekly format. Then weekly returns were calculated for both index and equity and then regression analysis was done.
DATA ANALYSIS
Predicted Y= 0.003256 + 0.0207x
N=47, R Square= 0.135527, F= 6.898041
Tstat (beta) = 6.24053832901454
Tstat (0.05,45) = 2.0141
The above regression equation tells us the relationship between X and Y. Where X is NIFTY’s weekly returns and Y is Aditya Birla Capital Ltd.’s weekly returns.
The positive sign of Beta tells us that there is a positive relationship between NIFTY and Aditya Birla Capital Ltd.’s weekly returns.
From the equation, it can be seen that if X rises by 1 unit, Y will rise by 0.0032567 units.
T calculated is more than T tabulated which means, β is statistically significant at a 5% confidence level.
R^2 is 0.014817 which means 1.4% of Y Aditya Birla Capital Ltd. is explained by X. And the balance is explained by error.
F is 0.66177 which is more than the table value which means the model is statistically significant at a 5% level.
CONCLUSION
β is statistically significant in the case of NIFTY and Aditya Birla Capital Ltd. Also, it can be concluded that Vaibhav Global is a High beta share. Since it is higher than 1