TITLE: Relationship of PVR INOX LTD with Nifty 50.
AUTHOR: Pulkit Agarwal
INTRODUCTION: PVR INOX Ltd. is a leading multiplex chain in India, created through the merger of two of India’s largest cinema chains, PVR Cinemas and INOX Leisure. The company is a dominant player in the Indian entertainment and cinema exhibition industry, offering a wide range of movie experiences through its high-quality screens, sound systems, and customer services.
OBJECTIVE: To find out Beta of PVR INOX LTD and its significance.
DATA COLLECTION: Data for Nifty 50 and PVR INOX Ltd. was downloaded from the NSE website, covering the period from 1st June 2023 to 31st May 2024. The data was processed to extract the Friday closing prices. Subsequently, the weekly returns for both Nifty 50 and PVR INOX Ltd. were calculated. The weekly return of Nifty 50 was denoted as ‘X’, and the weekly return of PVR INOX Ltd. was denoted as ‘Y’. Finally, a regression analysis was performed, with Y (PVR INOX Ltd.’s weekly return) regressed on X (Nifty 50’s weekly return).
DATA ANALYSIS:
WEEKLY RETURN OF PVR INOX LTD = -0.38597 +0.743009(weekly return of NIFTY 50)
N = 48, R Square = 0.10, F = 4.97, P-value = 0.03
INTERPRETATION:
- The equation above shows the relationship between the weekly returns of Nifty 50 and PVR INOX LTD. The positive sign before the coefficient of the weekly return of Nifty indicates a positive relationship, meaning if Nifty increases by 1 unit, PVR INOX LTD increases by 0.74 units, and vice-versa.”
- The T-statistic for Beta is 2.23, and the P-value is 0.03, which is less than 0.05, indicating that Beta is statistically significant at the 5% level.
- N = 49 (number of observations).
- The R-squared value is 0.10, meaning that 10% of the weekly return of PVR INOX LTD is explained by Nifty 50.
- The F-statistic is 4.97, and the P-value is 0.03, indicating that the overall model is statistically significant at the 5% level.
CONCLUSION: With a Beta of 2.23, it indicates that the company is suitable for short-term investments.