REPORT
Title: Calculation of beta of Aurobindo Pharma Ltd and its significance.
Name of the author: Akanksha Amrale
Introduction: Aurobindo Pharma Ltd was founded by Mr.P.V.Ramprasad Reddy, Mr.K Nityananda Reddy and a small group of highly committed professionals. It commenced operations in 1988-89 with a single unit manufacturing Semi-Synthetic Penicillin(SSP) at Pondicherry. Aurobindo Pharma became a public company in 1992 and it listed its shares on the Indian stock exchanges in 1995.In addition to being the market leader Semi-Synthetic Penicillins, it has a presence in key therapeutic segments such as neurosciences, cardiovascular,etc.
Objective: To calculate the beta Aurobindo Pharma 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(Aurobindo Returns) = 593.038+4.28X(Nifty Returns)+ E
● t-stat = 1.819
● R2 = 0.064
● F = 3.311
● N = 50
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 (4.283), which means if Nifty rises by 1 unit then Equity will rise by 4.283 units and vice-versa.
The number of observations(N) is 50 and the t-stat value is 1.819. The p-value for this is 0.075, which is more than 0.05 which means (b) is not statistically significant at 5%.
R2 is 0.06453, which means 6.4%of Equity is explained by Nifty, and a balance of 93.6% is an error. Error is due to the variables which are not in the model.
F value is 3.311445, the P value for which is 0.075, which is greater than 0.01, which means overall the model is not statistically significant.
Conclusion: Here the Beta value is equal to 4.283, which is greater than 1, it means it is a good investment proposal given that the Nifty does not rises.