Title: Calculation of Beta of Steel Authority of India and its Significance
Author: Sweta Mohanty
Introduction: Steel Authority of India Limited (SAIL) is a central public sector undertaking based in New Delhi, India. It is under the ownership of Ministry of Steel, Government of India with an annual turnover of INR 1,03,480 Crore (US$13 billion) for fiscal year 2021–22. With an annual production of 16.30 million metric tons, It is the largest government owned steel producer.[3] The hot metal production capacity of the psu will further increase and is expected to reach a level of 50 million tonnes per annum by 2025.
Objective: To calculate Beta of SAIL and its significance.
Data Collection: Data of SAIL 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 SAIL= 0.748+1.399 Weekly return of nifty +E
• t-stat = 5.958
• R2 = 0.430
• F = 35.498
• N = 49
• The above equation tells us about the relationship between Weekly Return of SAIL 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 1.399, which means if nifty rises by 1 unit, SAIL equity will rise by 1.399 units and vice versa.
• Number of Observations are 49 and t-stat is 5.958.
• 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 0.4302, which means that 43.02% of Y (SAIL) is explained by X (NIFTY), balance of 56.98% is error. Error is due to the variables which are not in the model.
• F is 35.498, the P value for which is 0 < 0.01, means overall the model is statistically significant.
Conclusion:
Since b = 1.399 is greater than 1, it is statistically significant.
SAIL is a good option for investment because for every increase in nifty there will an increase in the equity of SAIL.