Title: Relationship of Delhivery Ltd with Nifty-50
Author: Drishti Sanjay Gaikwad
Introduction
Delhivery Ltd is the third largest integrated logistics service providing verticals like express parcel services, supply chain, warehousing, freight, courier, and others (Delhivery, 2024). Recently, the company opted for ESOP (employee stock option plan) that was granted its 50,100 pool of employees for 4 years. The bid share price of Delhivery Ltd on 7th October 2024 is INR 399.45 and the ask price is INR 400.09 and its sell quantity is more than its buy quantity (Groww, 2024).
Objective
To find out the beta value of Delhivery Ltd and its significance.
Data Collection
The data of Delhivery Ltd and Nifty 50, from the period 01.05.2023 to 30.04.2024, was downloaded from NSE’s official website nse.india.
Data was manipulated to find Friday closing prices.
The weekly returns of Delhivery Ltd and the weekly returns of Nifty 50 were calculated.
The weekly return of Nifty-50 is X and the weekly return of Delhivery Ltd is Y.
Lastly, the weekly returns of Delhivery Ltd (Y) were regressed on weekly returns of Nifty 50 (X).
Data Analysis
Equation
Weekly Returns of Delhivery Ltd = 0.82 + 0.92 Weekly Returns of Nifty-50
|
N (no. of observations) |
49 |
|
R2 |
0.90 |
|
F-stat |
433.3 |
|
p-value |
0.00 |
The above equation depicts the relationship between the weekly returns of Delhivery Ltd and the weekly returns of Nifty-50. The plus (+) sign before the coefficient of Nifty-50 tells that if Nifty-50 rises, then Delhivery’s value rises too, and vice-versa.
If Nifty-50 rises by 1 unit, the company value will rise by 0.92 units. The figure in the bracket is t-stat for beta and the p-value for which is 0.219, which is less than 0.5, meaning beta is statistically significant at 5 percent levels of significance.
R2 value is 0.90, meaning 90 percent of Delhivery’s returns are explained by Nifty-50, the balance 10 percent are maybe due to fundamentals.
F-stat value is 433.3 and the p-value is 0.00, meaning that the overall model is statistically significant.
Conclusion
The beta value for weekly returns of Nifty-50 is less than 1 (β1 = 0.92), signifying that the company i.e., Delivery Ltd, is good for long-term investments.
References
Delhivery, (2024). “About Us.” Available at: <https://www.delhivery.com/about-us> Accessed on: 7th October 2024.
Groww, (2024). “Delivery”. Available at: <https://groww.in/stocks/delhivery-ltd> Accessed on: 7th October 2024.