Author – Varun Thakur
Introduction :
Voltas Limited is a leading Indian multinational company established in 1954 and headquartered in Mumbai. It is part of the Tata Group and operates in the engineering and consumer durables sectors. Voltas is best known for its air-conditioning and cooling solutions, including room air conditioners, commercial refrigeration, and HVAC systems. The company operates through key segments such as Unitary Cooling Products, Electro-Mechanical Projects and Services, and Engineering Products and Services. With a strong presence in both domestic and international markets, Voltas focuses on innovation, energy efficiency, and sustainability, maintaining a trusted brand image and a strong market position in India.
Objective:
To calculate Beta (β) of Voltas Ltd and observe its significance.
Literature Review:
Several researchers have studied the relationship between individual stock returns and market indices to understand systematic risk through regression analysis. Sharpe (1964) and Lintner (1965) introduced the concept of beta, which measures the sensitivity of a stock’s returns to changes in the overall market. Beta is an important tool for investors to evaluate the risk level of a stock relative to the market index.
Studies on the Indian stock market indicate that examining weekly returns of individual companies in relation to benchmark indices such as the NIFTY 50 helps in understanding market behavior and stock performance. Prior research shows that regression analysis is commonly used to analyze the relationship between stock returns and market returns. It has also been observed that stocks with lower beta values generally exhibit lower volatility and are preferred by investors seeking stable and less risky investment options.
Data Collection:
The data for the study were collected by calculating the weekly returns of the NSE, NIFTY 50, and Voltas Ltd. for a one-year period from 1st December 2024 to 30th November 2025. The data were obtained from the official NSE website, using Friday’s closing prices.
Weekly returns were computed using the formula :-
(Yt+1–Yt)/Yt×100
.
In the analysis, the weekly return of NIFTY 50 was taken as the independent variable (X), while the weekly return of Voltas Ltd. was considered the dependent variable (Y), and Y was regressed on X.
Data Analysis:
The regression equation was estimated by considering the weekly return of Voltas Ltd. as the dependent variable (Y) and the weekly return of NIFTY 50 as the independent variable (X).
The estimated relationship between NIFTY 50 and Voltas Ltd. is expressed as:
Y = 1286.86 − 0.51X, with a t-statistic of 0.81 for the slope coefficient.
The analysis is based on 47 observations (N = 47). The coefficient of determination (R² = 0.014) indicates that only 1.4% of the variation in Voltas Ltd.’s returns is explained by movements in the NIFTY 50, while the remaining 98.6% is influenced by other factors not included in the model.
The negative sign of the NIFTY 50 coefficient suggests a negative relationship between NIFTY 50 returns and Voltas Ltd. returns. This implies that a one-unit increase in NIFTY 50 returns results in a decrease of 0.51 units in Voltas Ltd. returns, and vice versa.
However, the p-value associated with the t-statistic for the beta coefficient is 0.42, which is greater than the 0.05 significance level. This indicates that the beta coefficient is not statistically significant. Further, the F-statistic value of 0.66 with a significance value of 0.42 shows that the overall regression model is not statistically significant at the 5% level.
Conclusion:
Based on the analysis of the relationship between Voltas Ltd. and the NIFTY 50, the estimated beta value of –0.51 indicates that Voltas Ltd. is less volatile than the overall market. The regression results show a very low R² value of 0.014, meaning that only 1.4% of the variation in Voltas Ltd.’s returns is explained by movements in the NIFTY 50. The beta coefficient is not statistically significant, as the p-value of 0.42 is greater than the 5% significance level. Additionally, the overall regression model is also not statistically significant, with an F-statistic of 0.66 and a significance value of 0.42. This suggests that Voltas Ltd.’s returns are largely influenced by factors other than general market movements, making the stock relatively stable and suitable for long-term, risk-averse investors.
References:
1. Sharpe, W. F. (1964). Capital Asset Pricing Theory. Journal of Finance.
2. Lintner, J. (1965). Risk and Return in Stock Markets. Review of Economics and Statistics.
3. Bodie, Z., Kane, A., and Marcus, A. (2018). Investments. McGraw-Hill Education.
4. National Stock Exchange of India (NSE). Historical data of NIFTY 50 and Voltas Ltd. (Official NSE website).