Title: Relationship of Aditya Birla Capital Ltd. with NIFTY 50
Author: Ayushi Chouhan
Introduction
Aditya Birla Capital Limited (ABCL), the financial services arm of the Aditya Birla Group, was established in 2007 and went public in 2017. The company offers diversified solutions in insurance, asset management, lending, and wealth management. As of October 7, 2024, ABCL’s market capitalization was ₹593.53 billion, with an ROE of 17.10%, ROA of 2.46%, and a NIM of 6.90%. Its capital adequacy ratio stood at 14.13%, and profits after tax grew 43% year-on-year, reaching ₹2,221 crore.
Objective: To find out the Beta of Aditya Birla Capital Ltd. and its significance.
Data Collection:
NIFTY 50 and Aditya Birla Capital Ltd. data was downloaded from the NSE site from 01-04-2023 to 31-03-24. Data was manipulated to get Friday’s Closing price and weekly returns were calculated by the formula ((Yt-1 – Yt )/ Yt)*100.
The weekly returns of Aditya Birla Ltd. were regressed on weekly returns of NIFTY 50.
Data Analysis:
Weekly returns of Aditya Birla Capital Ltd. = -027 + 1.093* Weekly returns of NIFTY 50
N = 46, R square = 0.170, F = 9.03, P value = 0.004
The above equation shows the relationship between NIFTY 50 and Aditya Birla Capital Ltd. The positive sign means if Nifty50 rises, Aditya Birla Capital will also rise and vice versa. The coefficient of NIFTY 50 has a t stat value of 3.006 and the P-value of which is 0.004, which is less than 0.05 meaning NIFTY 50 is statistically significant to increase the price of Aditya Birla Capital Ltd.
R Square value is 0.170, meaning 17% of Aditya Birla Capital Ltd. prices are explained by NIFTY 50 and 83% depending on other factors.
The value of F is 9.03 and the value of P is 0.004, which is less than 0.05 meaning the overall modal is statistically significant.
Conclusion
The coefficient of the weekly return of NIFTY 50 is 1.09 which is greater than 1 and positive which means Aditya Birla Capital Ltd. is good for short-term investment.