Author: Kalyani Shinde (113)
Introduction:
Kalyan Jewellers India Limited, established in 1908, has a rich legacy rooted in ethical, honest, and transparent business practices. Over the years, the company has introduced innovative initiatives such as selling 100% BIS hallmarked jewellers, launching the Kalyan Gold Card loyalty program, and implementing price transparency with Rate Tags on products. Its expansion into Maharashtra, Middle East markets, and online platforms reflects strategic growth. The IPO in 2021 and subsequent listing on NSE and BSE marked significant milestones for the company. With a strong Board of Directors and fundamental strengths like hyperlocal strategies and product diversity, Kalyan Jewellers faces challenges such as competitive Indian markets, COVID-19 revenue impacts, and significant borrowings, which require prudent risk management and strategic adaptation for sustained growth and profitability in the jewellery retail industry.
Objective:
To find out the Beta (β) of Kalyan Jewellers India Limited and its significance
Data Collection:
Data for NIFTY 50 and Kalyan Jewellers India Limited has been downloaded from nseindia.com for the period (01-02-2023 to 31-01-2024). Weekly closing prices were found out. Weekly returns of Kalyan Jewellers India Limited were regressed on weekly returns on NIFTY.
Data Analysis:
Format of Regression equation is Y = α + β(X)
Equation of regression of weekly returns of Kalyan Jewellers India Limited
on weekly returns of Nifty 50 Index-
weekly returns of Kalyan Jewellers India Limited = -2.0784 – 0.2498 × weekly returns of Nifty 50 Index (tstat=-0.3737)
Where,
Number of Observations = 48,
R Square = 0.0030
F = 0.1396
P-value = 0.7103
Interpretation-
- The above equation shows relationship between weekly returns of Kalyan Jewellers India Limited Company and weekly returns of Nifty 50 Index.
- Negative sign means inverse relation, meaning if weekly returns of Nifty 50 Index rise then weekly returns of Kalyan Jewellers India Limited Company falls and vice-versa, which is not the case here.
- If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of Kalyan Jewellers India Limited Company will fall by -2498 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value for which is 7103, which is greater than 0.05 meaning β is not statistically significant at 5% significance level.
- Number of Observations are 48, R-square value is 0030 meaning approximately 0.3% of weekly returns of Kalyan Jewellers India Limited are explained by weekly returns of Nifty 50 Index. Balance 99.7% (approximate) is error due to other variables which are not in the model.
- F is 1396, the P-value of which is 0.7103, which is more than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion:
As β (- 0.2498) is less than 1, Kalyan Jewellers India Limited is not a good company to invest in as this company’s fundamentals are weak and are not even affected by NIFTY.