Author: Mansi Bordia
Introduction: MRF Limited is India’s largest tyre manufacturer and a leading multinational conglomerate. Headquartered in Chennai, Tamil Nadu, MRF was founded in 1946 by K.M. Mammen Mappillai. The company produces a wide range of products, including tyres, rubber goods, paints, and sports equipment. With a revenue of ₹17,244 crores (2022) and Market Capitalization: ₹34,431 crores (2022), MRF has established itself as a leader in the Indian tyre industry and has Employees: 17,000+.
Objective: To find out beta of MRF Ltd. and its significance
Data collection: The data of Nifty 50 and MRF Ltd. was downloaded from NSE website, i.e., nseindia.com for the period of 1-6-23 to 31-5-24. The data was shaped to find out Friday’s closing price and its Weekly returns were calculated. Weekly return [(yt+1 – yt)/yt*100] of Nifty 50 was termed as X and of MRF Ltd. as Y. Then, Y was regressed on X.
Data analysis: Regression Equation=
Weekly return of MRF Ltd. = -0.52 + (-0.029) weekly return of nifty50
(-0.089)
N= 48, R2 = 0.00017, F = 0.0079, P-value = 0.92
The above equation depicts the relationship between Weekly return of MRF Ltd. and weekly returns of Nifty 50. The negative sign before the coefficient of Nifty 50 tells that if Nifty not rises MRF Ltd. will also not rise by – 0.029 unit. Figure in the bracket is t-stat for Beta and the p-value for which is 0.92 which is greater than 0.05 meaning beta is statistically not significant at 5% level.
R2 is 0.00017, which means 0.17% of Company return are explained by Nifty 50.
F= 0.0079 and p-value for that is 0.92 meaning overall model is statistically significant.
Conclusion: As the beta of MRF Ltd. (-0.029) is less than 1 but negative avoid this company.