Calculation of Beta for NELCO Limited Its Significance

Author’s Name: Narang Shende

Introduction

NELCO Limited is a listed public company incorporated on 31 August, 1940. It is classified as a public limited company and is located in Navi Mumbai, Maharashtra. It’s authorized share capital is INR 55.00 cr and the total paid-up capital is INR 22.82 cr.

NELCO Limited’s operating revenues range is INR 100 cr – 500 cr for the financial year ending on 31 March, 2022. It’s EBITDA has increased by 183.68 % over the previous year. At the same time, it’s book networth has increased by 50.79 %.

Objectives

To calculate beta of NELCO Limited and its significance.

Data Collection

Data collection for the period starting from 1st December 2021 to 30th November 2022 has been downloaded from nse.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-

=0.441263+0.678091NiftyX+e

Where, N=48; R2=0.603416 F=71.5121

Interpretation

The equation mentioned above tells us about the relationship between Nifty50 value and NELCO India Limited stock prices.

Presence of Positive sign in the equation represents that there’s direct relationship between the two i.e., if the value of NIFTY50 rises, stock price of NELCO Ltd. will also rise.The Co-efficient of NIFTY is 0.678091 which means if NIFTY rises by units the stock price of NELCO Ltd will rise by 1 unit and vice versa.

Total Number of Observations are 48.

Figure in the bracket is T-stat and the P-Value of which is 0.1 which is more than 0.05 which means p is statistically insignificant . Also, it is more than 0.01 so we can say that p is statistically insignificant.

F is 1.980 the P-Value for which is 0.1660 which is more than 0.01 which means overall the model is statistically insignificant.

Conclusion

As from the above mentioned regression equation it can be observed that the Beta is 0.678091 which is less than 1 which states the fact that it is NOT good for investment in short term.