Calculation of Beta for Avenue Super Mart (D-Mart) and Its Significance
Author’s Name: Abhinav Keshari
Introduction
D-Mart is a one-stop supermarket chain that aims to offer customers a wide range of basic home and personal products under one roof. Each D-Mart store stocks home utility products – including food, toiletries, beauty products, garments, kitchenware, bed and bath linen, home appliances and more – available at competitive prices that our customers appreciate. Our core objective is to offer customers good products at great value.
D-Mart was started by Mr. Radhakishan Damani and his family to address the growing needs of the Indian family. From the launch of its first store in Powai in 2002, D-Mart today has a well-established presence in 302 locations across Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana, Chhattisgarh, NCR, Tamil Nadu, Punjab and Rajasthan. With our mission to be the lowest priced retailer in the regions we operate, our business continues to grow with new locations planned in more cities.
The supermarket chain of D-Mart stores is owned and operated by Avenue Super Marts Ltd. (ASL). The company has its headquarters in Mumbai.
Objectives
To calculate beta of Avenue Super Mart (D-Mart) and its significance.
Data Collection
Data collection for the period starting from 1st December 2021 to 30th November 2022 has been downloaded from Marketwatch.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-
=92.33-0.453NiftyX+e
(3.537)
Where, N=49; R2=0.213 F= 12.51
Interpretation
The equation mentioned above tells us the relationship between Nifty50 value and Avenue super marts 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 ASL will fall.. The Co-efficient of NIFTY is 92.33 which means, if NIFTY rises by 92.33 units the stock price of ASL will rise by 1 unit and vice versa.
Total Number of Observations are 49..
Figure in the bracket is T-stat and the P-Value of which is 0.0009 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 0.2138 which means 21% of Avenue supermarts (Y) is explained by NIFTY(X) balance 79% is error. Error here is due to variables which aren’t in the model.
F is 12.51 the P-Value for which is 0.0009 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 92.3 which is more than 1 which states the fact that it is GOOD for investment in short term.