Calculation of Beta of Infosys Ltd.
Author: Isha Agrawal.
Introduction:
Infosys is an Indian multinational corporation that provides business consulting, technology, engineering, and outsourcing services. It was founded in 1981 by seven entrepreneurs with a capital investment of just $250. Today, Infosys is one of the largest and most successful information technology companies in the world, with a market capitalization of over $60 billion and a global workforce of over 300,000 employees.
Infosys is known for its innovative business model, which is based on the principles of global delivery and the use of offshore outsourcing to provide high-quality services at competitive prices. The company has a strong focus on sustainability, social responsibility, and diversity, and has received numerous awards and recognitions for its efforts in these areas. Infosys has a strong presence in many countries around the world, with a particularly large market share in the United States, Europe, and Asia. Its clients include some of the world’s largest and most respected companies in a variety of industries, including finance, healthcare, manufacturing, and telecommunications.
Objective:
To calculate beta of Infosys Ltd.
Data Collection:
Data of Infosys from 01-01-2022 to 31-12-2022 was downloaded from the
NSE website.
• Friday’s weekly closing prices have been found out.
• Weekly Return have been calculated with the formula of
(Y2-Y1)/Y1*100
• The Weekly Return of Equity has been regressed on the Weekly Return of nifty.
Data Analysis:
Weekly Return of Infosys ltd = 1446.62114466 + 12.07465509 Weekly Return of Nifty
• t-stat = 40.67115903
• R2 = 0.012046688
• F = 0.5852891859
• N = 50
The above equation tells us about the relationship between the Weekly Return of Infosys Ltd & Weekly Return of Nifty 50. The negative sign means that there is an inverse relationship. If nifty 50 rises, equity falls and, if nifty 50 falls, equity rises. The co-efficient of the weekly return of nifty is1446.62114466, which means if nifty rises by 1 unit, Infosys ltd will fall by 12.07465509 units and vice versa.
• The number of Observations is 50 and the t-stat is 40.67115903.
• The p-value is 0, which is more than 0.05, means that b is statistically insignificant at 5%. Even if it is more than 0.01, b is statistically insignificant at 1%.
• R2 is 0. 012046688, which means that 1.204% of Y (Infosys ltd) is explained by X (nifty), and the balance of 25.142% is error. Error is due to the variables which are not in the model.
• F is 0.585291859, the P value for which is 0. 585291859 > 0.01, which means overall the model is statistically insignificant.
Conclusion:
Since b = 12.07465509 is more than 1, it is statistically significant.
Infosys Ltd is a good option for investment because for every increase in nifty