Author: Purva Raorane
Introduction:
Pidilite Industries Limited is an Indian adhesives manufacturing company based in Andheri (East), Mumbai. The company is the dominant and leading adhesives company in India. Pidilite also manufactures products across verticals such as art materials and stationery; food and fabric care; car products, adhesives, and sealants; and speciality industrial products like adhesives, pigments; textile resins, leather chemicals, and construction chemicals.
Objective:
To find out Beta of Pidilite Industries Limited and its significance.
Data Collection:
Data of Pidilite Industries Limited and Nifty 50 was downloaded from NSE Website for the period 1st May 2023 to 30th April 2024 and is manipulated to get Friday closing price. Weekly return of Nifty 50 and Pidilite Industries Limited were calculated. Weekly return of Pidilite Industries Limited (Y) was regressed on Weekly return of Nifty 50 (X).
Data Analysis:
Weekly Return of Pidilite Industries Limited = -0.20+ (-0.33) Weekly Return of Nifty 50
(-1.12)
N = 48, R2 =0.03, F = 1.26, P value = 0.27
Interpretation:
The above equation depicts that relationship between weekly return of Pidilite Industries Limited and weekly return of Nifty 50. The “+” sign before the coefficient of Nifty 50 tells that if Nifty 50 rises, then Pidilite Industries Limited will also rice and vice versa. If Nifty 50 rises by 1 unit, then Pidilite Industries Limited will rise by 0.9 units. The figure in the bracket is T Stats for Beta and the P Value for which is 0.27 which is more than 0.05 meaning beta is statistically insignificant at 5% level. R2 is 0.03 meaning 3% of Pidilite Industries Limited return and explained by Nifty 50. The balance 97 % maybe due to fundamentals. F is 1.26 and the P value is 0.27 meaning overall model is statistically significant.
Conclusion:
As Beta for Pidilite Industries Ltd is (-0.33) which is negative. Therefore, it is advisable to avoid the investment.