CALCULATION OF BETA OF NESTLE INDIA
LIMITED AND ITS SIGNIFICANCE
NAME OF THE AUTHOR: NASRIN PILLAI
INTRODUCTION
Nestle India Limited is the Indian subsidiary of Nestlé which is a Swiss multinational company. The company is headquartered in Gurgaon, Haryana. The company’s products include food, beverages, chocolate, and confectioneries. They have more than 2000 brands ranging from global icons to local favorites, and are present in 191 countries around the world.
OBJECTIVES
To calculate beta of Nestle India Limited and its significance
DATA COLLECTION
Data of Nestle India Limited from 01-12-2021 to 30-11-2022 from NSE website
• Friday weekly closing prices has been found out
• Weekly Return have been calculated with the formula of (Y2-Y1)/Y1*100
• Weekly Return of Equity have been regressed on Weekly Return of Nifty
DATA ANALYSIS
Weekly Return of Nestle India = -0.0416 + 0.552 Weekly Return of Nifty + E
• t-stat = 3.809
• R2 = 0.235
• F = 14.508
• N = 49
The above equation tells us the relationship between Weekly Return of Nestle India and Weekly Return of Nifty. The negative sign means that there is a indirect relationship. If nifty rises, equity falls and if nifty falls, equity rises. The co-efficient of weekly return of nifty is 0.0416, which means if nifty rises by 1 unit, Godrej properties will rise by 0.0416 units and vice versa.
Number of Observations are 49 and t-stat is 3.809.
P value is 0, which is less than 0.05, means that b is statistically significant at 5%. Even it is less than 0.01, b is statistically significant at 1% level.
R2 is 0.235, which means that 23.5% of Y (Nestle India) is explained by X (nifty), balance of 76.5% is error. Error is due to the variables which are not in the model.
F is 14.508, the P value for which is 0 < 0.01, means overall the model is statistically significant.
CONCLUSION
Since b = 0.552 is lesser than 1, it is statistically not significant.
Nestle India Limited is not a good option for investment because for every increase in nifty there will an decrease in the equity of Nestle India.