Title: Relation of Grasim Industries with Nifty 50 and to calculate Beta.
Author: Gurubharathi K R
Introduction:
Grasim Industries Limited, a flagship company of USD $ 60 billion Aditya Birla Group, was established as a textiles manufacturer in India in 1947. Today, it is a leading global player in VSF and a prominent producer of Chlor-Alkali, Advanced Material, Linen Yarn and Fabrics in India. Grasim recently ventured into the paints business and has also set up a B2B online market place for building materials. It is also the largest cement producer and a prominent diversified financial services player in India through its subsidiaries UltraTech Cement and Aditya Birla Capital.
Objectives:
To calculate Beta of Grasim Industries to see its significance.
Literature Review:
- Grasim Industries Limited, a flagship company of the Aditya Birla Group, ranks amongst the top publicly listed companies in India. Grasim has completed 76 glorious years of its existence. Incorporated in 1947, it started as a textiles manufacturer in India. Today, it has evolved into a leading diversified player with leadership presence across many sectors. It is a leading global producer of Viscose, Diversified Chemicals, Linen Yarn and Fabrics producer in India. The company recently has entered paints business under the brand name ‘Birla Opus’ and would be setting up six plants of manufacturing decorative paints across Pan India locations. Leveraging the Group synergies, Grasim has launched “Birla Pivot”, the B2B online marketplace for building materials. Through its subsidiaries, UltraTech Cement, Aditya Birla Capital and Aditya Birla Renewables, it is also India’s prominent cement producer, leading diversified financial services player and clean energy solutions player. At Grasim, there is an endeavour to create sustainable value for 43000+ employees, 247,000+ shareholders, society, and customers. The company reported consolidated net revenue of ₹1,17,627 Cr. and EBITDA of ₹20,478 Cr. in FY 2023.
- Grasim is the largest exporter of Viscose Rayon Fiber in the country, with exports to over 50 countries. Grasim is headquartered in Mumbaiand also has plants at Nagda(Madhya Pradesh), Kharach (Kosamba, Gujarat), Veraval (Gujarat), Bharuch (Vilayat GIDC, Gujarat) and Harihar, (Davangere, Karnataka).
Grasim Industries Ltd. supplies Viscose Staple Fiber (VSF). The Group’s VSF business operates through its three companies – Grasim Industries in India, Indo Bharat rayon in Indonesia, Thai Rayon Corporation in Thailand, which also oversees its Chinese operations at Birla Jingwei Fibres, China.
By 2021, Grasim industries, the flagship company of the global conglomerate Aditya Birla Group, entered the paints business with an investment of INR 5,000 crore over three years. Which was later increased to a capex of INR 10,000 crore over the same period of time thus trying to disrupt the market.
Data Collection: The data for Nifty and Equity of Grasim Industries has been downloaded from nseindia.com and finance.yahoo.com from 1st November, 2022 to 31st October, 2023. Data was manipulated to calculate the Friday closing price.
Data Analysis:
Grasim share 0.0921+ 1.319 nifty
n=51, Rsquare 0.561, F = 66.287
The above equation shows the relationship of Grasim with Nifty
If Nifty rises by 1 unit, Grasim will rise by 1.319 unit
t stat for b is 8.14 and the p value is 0 which indicates that the coefficient for Nifty is statistically significant, meaning Nifty does impact grasim.
Rsquare is 0.57, meaning 57% of Grasim share is explained by the movement in Nifty, meaning 43% depends upon other things like fundamentals. F = 66.28, and p value is less than 0.05, so the model is statistically significant at 5% level
Conclusions:
As Beta is (0.092) is less than 1, so good for long term investments
References:
https://finance.yahoo.com/quote/GRASIM.NS?p=GRASIM.NS&.tsrc=fin-srch
Ok, good