CALCULATION OF BETA OF VOLTAS LIMITED AND ITS SIGNIFICANCE
NAME OF THE AUTHOR: Varun Aadarsh Bhargav
INTRODUCTION:
Voltas Limited is a six-decade old company in India with expertise in Air Conditioning & Cooling technology. Beko, on the other hand, is an international home appliance brand of the Arçelik Group owned by Koç Holding – a Fortune Global 500 company in Europe.
With Voltas strong foothold in the Indian market, the company understands the needs and requirements of modern consumers. From sales to service, Voltas can bridge all gaps. Our latest collaboration with Beko’s state-of-the-art R&D, patents and best-in-class technology, will ensure Voltas Beko is a brand that designs products and services with consumer-first approach. It’s an amalgamation of elegance and sophistication that’s designed to simplify our consumers’ everyday household needs.
OBJECTIVES
To calculate beta of Voltas Limited and its significance
DATA COLLECTION
Data of Voltas 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 Voltas LTD. = 0.770 + 0.907 Weekly Return of Nifty + E
• t-stat = 1.5835
• R2 = 0.0506
• F = 2.507
• N = 49
The above equation tells us about the relationship between Weekly Return of Voltas LTD. and Weekly Return of Nifty. The positive sign means that there is a direct relationship. If nifty rises, equity rises and if nifty falls, equity falls. The co-efficient of weekly return of nifty is 0.907, which means if nifty rises by 1 unit, Voltas Ltd. will rise by 0.907 units and vice versa.
Number of Observations are 49 and t-stat is 1.5835.
P value is 0, which is less than 0.0, means that b is statistically significant at 5%. Even if it is less than 0.01, b is statistically significant at 1% level.
R2 is 0.0506, which means that 5.06% of Y (Voltas Ltd.) is explained by X (nifty), balance of 94.94% is error. Error is due to the variables which are not in the model.
F is 2.507, the P value for which is 0 < 0.01, means overall the model is statistically significant.
CONCLUSION
Since b = 0.907 is lesser than 1, it is not statistically significant.
Voltas Ltd. is not a good option for investment because for every increase in nifty there will not be an increase in the equity of Voltas Ltd.