Title: Calculation of beta of SBI CARDS & PAYMENTS SERVICES Ltd. and its significance.
Name of author: Sumit Vats
Introduction: SBI Cards & Payment Services Ltd. was previously known as SBI Cards & Payment Services Private Limited. It is a pure play
credit card company and payment solutions provider in India. SBI Card was launched in October 1998 by State Bank of India, and GE Capital.
In December 2017, State Bank of India and The Carlyle Group acquired GE Capital’s stake in the company. SBI Card is headquartered in
Gurugram, Haryana/Delhi NCR and have branches in over 100 cities across India. The company is the only publicly listed pure-play credit card
issuer in India.
Objective: To calculate the beta of SBI CARDS & PAYMENTS SERVICES Ltd. and its significance.
Data Collection: Data from 1st December 2021 to 30th November 2022 has been downloaded from www.nseindia.com.
Weekly returns of NIFTY 50 has been calculated using (X2-X1)/X1*100 and Weekly returns of Equity has been calculated using (Y2-Y1)/Y1*100. Weekly Returns of Equity has been regressed on Weekly returns of NIFTY.
Data Analysis:
• Y(SBI Returns) = -0.284+0.266X(Nifty Returns)+ E
• t-stat = 0.969
• R2 = 0.019
• F = 0.939
• N = 49
The above equation tells us about the relationship between Nifty returns and Equity returns. The positive sign means, there is a direct relationship. If
Nifty rises, Equity will also rise and if Nifty falls Equity will also fall. The coefficient of Nifty is (0.266), which means if Nifty rises
by 1 unit then Equity will rise by 0.266 units and vice-versa.
Number of observation(N) are 49 and t-stat value is 0.969. P value for this is 0.337586, which is more than 0.05 which means (b) is not statistically significant at 5%.
R2 is 0.0195, which means 1% of Equity is explained by Nifty, balance 99% is error. Error is due to the variables which are not in the model.
F value is 0.93, the P value for which is 0.33, which is greater than 0.01, which means overall the model is not statistically significant.
Conclusion: Here the Beta value is equal to 0.266, which is less than 1, it means it is not a good investment proposal given that the Nifty rises.