Topic Name: Relationship of RBL Bank LTD. with NIFTY.
Author: Rohan Kailas Gosavi, MMS First Year, Batch B
Roll No. : 76
Introduction: RBL Bank is one of India’s leading private sector banks with an expanding presence across the country. The Bank offers specialized services under five business verticals namely: Corporate Banking, Commercial Banking, Branch & Business Banking, Retail Assets and Treasury & Financial Markets Operations. It currently services over 13.65 million customers through a network of 520 branches; 1,115 business correspondent branches (of which 298 banking outlets) and 414 ATMs spread across 28 Indian states and Union Territories. RBL Bank is listed on both NSE and BSE (RBLBANK).
Objective: To calculate beta of RBL Bank LTD. and find out its significance.
Views & reviews:
Mr. R. Subramaniakumar, Managing Director & CEO, RBL Bank LTD.
FY 2022-23 was the first full year of the post-pandemic era. We exhibited undaunted determination towards recovery and business growth. Despite the immense pressure stemming from the global macroeconomic situation and the ongoing impacts of the Russia-Ukraine conflict, both the Indian banking sector and the economy displayed remarkable resilience and surged ahead steadily. The BFSI sector has admirably served the country through this challenging period by reimagining its services and products digitally. Going forward, our core priority continues to be granularity and retailisation of our portfolio, while maintaining our asset quality standards. To this end, we are innovating and enhancing our products suite, and strengthening our efforts through wider reach and higher quality customer service and engagement.
Mr. Prakash Chandra, Non Executive Chairman, RBL Bank LTD.
The Bank has undertaken a number of initiatives on the technology and business front in the recent years. Successful translation of these initiatives into business and earnings growth has been primarily due to the employees of the Bank, who have embraced the philosophy of change to help the Bank emerge as a modern and customer-centric institution. We are grateful to the employees for their continued commitment and dedication towards the Bank. We appreciate the healthy relationship with the Officers Association and Employee Union, which has facilitated the growth and development of the Bank and has created a positive work environment.
Data Collection:
Data is taken from 01-07-2022 to 30-06-2023. It has been downloaded from NSE Website, weekly closing prices were found out then weekly return of NIFTY and weekly return of RBL Bank LTD. were calculated. NIFTY return is taken as “X” and RBL Bank LTD. return as “Y”.
Data Analysis: –
Equation “Y= 0.9248+2.0009 (X)”
(tstat = 3.4481)
n = 50, R2 = 0.19859, F = 11.89431
The above equation shows the relationship between the closing price of Nifty 50 (x) and the closing price of RBL Bank LTD. (y) the positive sign means a positive relationship meaning if “x” rises “y” rises and vice versa. If “x” rises by 1 unit, “y” rises by 2.0009, “n” means there are 50 observations. The t-stat for b is 3.4481, which means b is statistically significant at 5% level. R2 is 0.19859 means 19.85% of y is explained by x, balance 80.15% is error due to the variables which are not in model. As the calculated value of F =11.89431 is more than the tabulated F (F 0.05,1DF,48DF) = 4.043, the overall model is statistically significant at the 5% level.
So overall the model is statistically significant at the 5% level.
Conclusion:
As Beta is 2.0009 which is more than 1, the share is good for short term.
Refernces:
Annual Statutory Reports and Financial Statements for the Financial Year 2022-2023 (2023) https://ir.rblbank.com/pdfs/financial-highlights/rbl-bank-ar-22-23.pdf
Director’s Report of RBL Bank LTD.(2023) https://www.indiainfoline.com/company/rbl-bank-ltd-share-price/directors-report/5982