Title: RELATIONSHIP OF MRF LTD WITH NIFTY 50
Author: MOHIT CHELANI
Introduction: MRF LIMITED is one of India’s leading tire manufacturers and is renowned for producing high-quality tires for various vehicles, including passenger cars, trucks, and two-wheelers. Here’s an overview of its historical background. MRF was established in 1946 by K.M. Mammen Mappillai in Madras (now Chennai), India. Initially, the company started as a small rubber manufacturing unit that produced toy balloons. In the early years, MRF diversified from manufacturing balloons to tires in 1952, marking its foray into the tire industry. This shift was pivotal in establishing the company’s reputation in the automotive sector. MRF has always emphasized research and development, introducing innovative products and technologies. The establishment of its own R&D center in the 1980s helped MRF enhance its product quality and performance standards. MRF Ltd was listed on the Bombay Stock Exchange in 1995, drawing attention from investors and further solidifying its position as a leading player in the rubber and tire industry. By the 1990s and 2000s, MRF had become the largest tire manufacturer in India. The company also established a significant market presence in various international markets. As of the last available data in October 2023, MRF continues to be a market leader in India’s tire industry, focusing on innovation, sustainability, and expanding its product offerings. The company is also increasingly looking to global markets while maintaining a strong domestic footprint
Objective: To find out Beta of MRF ltd and its significant.
Data Collection: Data for Nifty 50 and MRF LIMITED was downloaded from NSE site for the period 01st April 2023 to 31st March 2024. Data was manipulated to get Friday closing prices and weekly returns were calculated by the formula: (Yt-1 – Yt) / Yt*100 weekly returns of MRF Limited was regressed on weekly returns of Nifty 50.
Data Analysis: Weekly return of MRF Limited = -0.55 + (0.64)
N = 46, R2 = 0.0664, t stat = (-1.1110), F = 3.1311, P-value = 0.0837
The above equation shows the relationship between Niffty50 & MRF ltd. The positive sign before 0.64 means if Nifty decrease MRF ltd raises & vice versa. The Coefficient of Nifty50 has t stat = (1.7695) & the P value of which is 0.0837 meaning Nifty50 is not statistically significant. To increase the prices of MRF ltd, R2 is 0.0664 meaning 6.64% of MRF ltd prices are explained by Nifty50. 93.36% dependents upon other factors like fundamentals are other factors. F is 3.1311 & the P value of this is 0.0837 meaning it is more than 0.05 meaning the overall model is not statistically significant.
Conclusion:
0.63 coefficient is positive, so MRF ltd is good for long term investment.