Title:
Calculation of Beta of Dodla Dairy Ltd and Significance
Relationship of Dodla Dairy Ltd and Nifty
Author: Devina Desa
Introduction:
A public limited company, Dodla Dairy Limited has its registered and main offices in Hyderabad, Telangana State, India. Production started in 1998 after the company was formed in 1995. Their products are being sold in 11 states, however their sourcing is currently concentrated on 5 states. 110 milk chilling facilities exist there.
Objective:
To calculate the Beta of Dodla Dairy Ltd and its significance and the relationship between the Dodla Dairy Stock and the Nifty Index
The Beta of a stock is calculated to gauge the riskiness of the investment and volatility of the stock with respect to the market. An investor can know the stability of the company by the beta of its stock.
Literature Review:
Dodla Dairy, a family owned dairy business based in the southern state of Andhra Pradesh, India, has successfully made its mark on the Indian liquid milk industry, but now needs to move to the next level. The company is considering a backward integration initiative into the dairy farming business, but is faced with internal limitations of capital constraint and limited risk propensity. D. Sunil Reddy, the managing director of Dodla Dairy, is looking at the option of getting an external partner on board via private equity. This would not only help him to bring in needed resources, but also provide him with the expertise to rapidly enter into the dairy farming sector, which is a relatively new area for him. But he must carefully consider whether the advantages of enlisting a private equity partner from outside the company would outweigh the potential loss of control.
This case study can be used to demonstrate the difficulties experienced by family-owned agribusinesses in rapidly evolving emerging markets and the effects that would have on their current operations.
Even though the nation only became the world’s top milk producer in the 1990s, the dairy industry has grown at an amazing rate of more than 5% annually over the past three decades.For millions of rural families, dairying now serves as a significant secondary source of income and a key potential for employment and revenue generation. This study uses Z Score Analysis to evaluate the financial standing of eleven sample dairy businesses in Andhra Pradesh.
Data Collection:
Data was collected from 01st April 2022 to 29th March 2023 of Dodla Dairy Ltd and the Nifty Index.
Data Analysis:
N=50 R Square= 0.133 F= 7.410 Significance= 0.0009
Nifty Return= 0.468
Dodla Return= -0.045
t- stat= (2.722)
Y^= -0.045+ 0.468
Conclusion:
The above equation shows the relationship between Y and X. Negative sign means there is a
Inverse relationship. Figure in the bracket is T-stats for b.
R2 is 13% of Y is explained by X. F is 7.410.
The beta is 0.468.Beta is less than 1. Hence, the stock of Dodla Dairy Ltd is good for Long term Investment. The Company of Dodla Dairy Ltd is a stable Company.
References
Srinivas K. Reddy, Sanjana Kohli, 31 Jul 2014. “Dodla Dairy: Churning the Business of Milk in India”,Institutional Knowledge (InK) at Singapore Management University.
T.HimaBindu, Dr.S.E.V.Subrahmanyam, Dr.M.S.Bhat, April 2015. “FINANCIAL PERFORMANCE ANALYSIS OF SELECTED DAIRY UNITS IN ANDHRA PRADESH
USING ALTIMAN Z SCORE MODEL”, Asia Pacific Journal of Research Vol: I. Issue XXVI.