Calculation of Beta for Marico Limited and Its Significance
Author’s Name: Monish Pandey
Introduction
Marico Limited is an Indian multinational consumer goods company providing consumer products and services in the areas of health, beauty and wellness. With its headquarters in Mumbai, Marico is present in over 25 countries across Asia and Africa. It owns brands in categories of hair care, skin care, edible oils, health foods, male grooming, and fabric care such as Parachute, Saffola, Hair & Care, Parachute Advanced, Nihar Naturals, and Mediker.
Objectives
To calculate beta of Marico Limited and its significance.
Data Collection
Data collection for the period starting from 1st December 2021 to 30th November 2022 has been downloaded from nse.com. Then Friday weekly Closing Prices have been calculated.
And weekly data of equity share of the chosen company has been regressed on weekly report of NIFTY50.
Data Analysis
Regression Equation that was formed after the calculations is-
=0.5425NiftyX-0.210+e
(2.830)
Where, N=50; R2=0.143 F=8.012
Interpretation
The equation mentioned above tells us about the relationship between Nifty50 value and Marico Limited’s stock prices.
Presence of Negative sign in the equation represents that there’s inverse relationship between the two i.e., if the value of NIFTY50 rises, stock price of Marico Ltd. will also decline. The Co-efficient of NIFTY is 0.5425 which means if NIFTY rises by 0.5425 units the stock price of Marico Ltd will decline by 1 unit and vice versa.
Total Number of Observations are 50.
Figure in the bracket is T-stat and the P-Value of which is 0.006 which is less than 0.05 which means p is statistically significant at 3% level. Also, it is less than 0.01 so we can say that p is statistically significant at 1% level.
R2 is 0.143 which means 14% of MARICO(Y) is explained by NIFTY(X) balance 86% is error. Error here is due to variables which aren’t in the model.
F is 8.012 the P-Value for which is 0.006 which is less than 0.01 which means overall the model is statistically significant.
Conclusion
As from the abovementioned regression equation it can be observed that the Beta is 0.5425 which is less than 1 which states the fact that it is NOT good for investment in short term.