Relationship of Raymond Ltd with NIFTY50
Author: Rishabh Anand Golla
Introduction
Raymond Ltd is a leading Indian textile and apparel company, renowned for its premium suiting fabrics and branded clothing under labels like Raymond, Park Avenue, ColorPlus, and Parx. The company also has interests in real estate, engineering, and FMCG (through Raymond Consumer Care). As a well-established player in the Indian market, Raymond’s stock performance is influenced by macroeconomic factors, including the broader equity market represented by the NIFTY50.
Objective
To determine the Beta (β) of Raymond Ltd and assess its significance in relation to the NIFTY50 index.
Literature Review
1. Growth of India’s Textile and Apparel Industry
Kumar & Sharma (2021) highlight that India’s textile sector contributes 7% to industrial output, 2% to GDP, and 12% to exports. The industry is driven by rising disposable incomes, urbanization, and increasing demand for branded apparel. Government initiatives like PLI (Production Linked Incentive) schemes* and *Make in India* further bolster growth.
2. Impact of Consumer Preferences on Branded Apparel
Mehta & Patel (2019) suggest that Indian consumers are increasingly shifting from unorganized to organized retail, favoring brands offering quality, sustainability, and omnichannel presence. Companies like Raymond benefit from strong brand equity and premium positioning.
Data Collection
Raymond Ltd. and NIFTY50 data was downloaded from NSE site for the period 01-01-2024 to 31-12-2024 and the data was manipulated to find out the Friday closing prices. Weekly returns were calculated, weekly return of NIFTY50 is x and weekly return of Varun Beverages is y. y was regressed on x.
Data Analysis
The equation is EQUITY = -0.75 + 0.89 (NIFTY50)
(1.42)
Number of Observations (N) = 47, F = 0.019, R Square = 0.12
Interpretation
The above equation shows the relationship between NIFTY50 and Equity. Equity is a dependent variable and NIFTY50 is an independent variable. Positive sign means there is direct relationship between equity and NIFTY50 meaning if NIFTY50 rises, equity rises and if NIFTY50 falls equity falls. If NIFTY50 rises by 1 rupee, equity will rise by 0.89 units. Figure in bracket () is t-stat and the p value for this is 0.16 which is more than 0.05 meaning NIFTY50 is not statistically significant at 5% level. Number of observations are 47, r2 = 0.12 which means 12% of equity is explained by NIFTY50, balance 88% is the error model. F= 0.019 and the p value or the significance value is 0.16 which is more than 0.05 which means overall the model is not statistically significant at 5% level.
Conclusion
The beta value is 0.89, which is less than 1, meaning it is good for long term investment.
References
1. Kumar, R., & Sharma, P. (2021). “Growth Prospects of India’s Textile Industry.” Indian Journal of Economics & Business.
2. Mehta, S., & Patel, A. (2019). “Consumer Shift to Branded Apparel in India.” International Journal of Retail Management.