Name of author: Kajol Chakraborty
Introduction: Kalyani Steels Ltd (KSL) was established in Feb 1973 in Pune as a part of the Kalyani Group, primarily with the objective of fulfilling the group’s in-house requirements of forging quality steel. Post reforms and liberalization in early 90’s, the manufacturing sector witnessed unprecedented growth, and KSL identified tremendous potential beyond serving the in-house requirements. There was a need to grow, upgrade, diversify and economize. Thus, KSL shifted base to Hospet, Karnataka, to set up a world class integrated steel mill (iron-ore based, blast-furnace route) in 1997, with a hot metal capacity of 2,90,000 TPA. This establishment was of extreme strategic importance, with southern region being a budding automotive hub, and Karnataka being a state rich in Iron Ore, along with Mangalore port for other raw material imports.
Objective: To calculate the beta of KALYANI STEEL 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(Kalyani Returns) = 0.085+0.384X(Nifty Returns)+ E
• t-stat = 1.601
• R2 = 0.051
• F = 2.563
• 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 (0.384), which means if Nifty risesby 1 unit then Equity will rise by 0.384 units and vice-versa.
Number of observation(N) are 49 and t-stat value is 1.601. P value for this is 0.11604, which is more than 0.05 which means (b) is not statistically significant at 5%.
R2 is 0.05, which means 5% of Equity is explained by Nifty, balance 95% is error. Error is due to the variables which are not in the model.
F value is 2.56, the P value for which is 0.11, which is greater than 0.01, which means overall the model is not statistically significant.
Conclusion: Here the Beta value is equal to 0.384, which is less than 1, it means it is not a good investment proposal given that the Nifty rises.