Title : Relationship of Dr. Reddy’s Laboratory Ltd. with Nifty 50
Author : Disha Kshetija
Introduction :
Dr. Reddy’s Laboratories Ltd is a public limited company that manufactures pharmaceutical and botanical products. The company’s share price has a 52-week low of ₹5,205.55 and a 52-week high of ₹7,107.45. In the second quarter, the company reported a net profit of ₹1,482 crore, which was higher than the consensus estimate of ₹1,281 crore. The company’s revenue was ₹6,903 crore, which was a 9% increase from the previous quarter. The company’s EBITDA was ₹2,014 crore, which was a 6% increase from the previous quarter.
Objective : To find out the Beta of Dr. Reddy’s Laboratory Ltd. and its significance.
Data Collection :
NIFTY 50 and Dr. Reddy’s Laboratory Ltd. data was downloaded from the NSE site from 01-06-2023 to 30-05-24. Data was manipulated to get Friday’s closing price and weekly returns were calculated by the formula ((Yt-1 – Yt )/ Yt)*100. Weekly returns of Dr. Reddy’s Laboratory Ltd. were regressed on weekly returns of NIFTY 50.
Data Analysis :
Weekly returns of Dr. Reddy’s Laboratory Ltd. = -3.40 + 2.14* Weekly returns of Nifty 50 N = 49, R square = 0.04, F = 1.97, P value = 0.167
The above regression equation shows the negative (negative sign of coefficient of NIFTY 50) relationship between NIFTY 50 and Dr. Reddy’s Laboratory Ltd. which indicates that decrease in NIFTY 50 is associated with decrease in Dr. Reddy’s Laboratory Ltd. The coefficient of NIFTY 50 has a t-statistic of 1.40 and a P value is more than 0.05, indicating that it is statistically significant . This means that NIFTY 50 is a significant predictor of Dr. Reddy’s Laboratory Ltd.’s returns. The R square value is 0.04 indicates that 4% of the variation in Dr. Reddy’s Laboratory Ltd.’s returns can be explained by variations in NIFTY 50. The remaining 96% may be explained by other factors. The F value is 1.97 and the P value is 0.167 indicating the overall model is statistically significant.
Conclusion :
The coefficent of weekly return of NIFTY 50 is 2.14 which is greater than 1 means Dr. Reddy’s Laboratory Ltd. is good for short-term investment.