Kiran Srinivas
Introduction about KPR Mills Ltd.
KPR Mills Ltd. is a leading Indian textile and apparel manufacturing company with a strong presence across yarn, fabric, garments, and sugar production. Established in 2003, the company has built an integrated business model that enables cost efficiency and quality control. KPR Mills exports its products to several international markets and is known for its focus on sustainability, operational efficiency, and consistent financial performance. Due to its diversified operations and export orientation, KPR Mills is considered an important player in the Indian textile sector.
Objective
·To calculate the Beta (β) of KPR Mills Ltd. with respect to the Nifty 50 Index.
·To examine the relationship between market returns and stock returns of KPR Mills Ltd.
·To analyze the statistical significance of the relationship.
Literature Review
Article 1:
According to Sharpe (1964), the Capital Asset Pricing Model (CAPM) establishes Beta as the primary measure of systematic risk in a portfolio. His research demonstrates that a stock’s expected return is directly related to its sensitivity to market movements. This framework remains the global standard for understanding how individual stocks, like KPR Mills, interact with benchmark indices like the Nifty 50.
Article 2:
Empirical studies on the Indian textile sector (e.g., Gupta & Rao, 2019) highlight that mid-cap manufacturing stocks often exhibit lower correlation with the Nifty 50 due to sector-specific drivers. These studies suggest that factors such as global cotton prices, rupee depreciation, and export demand often influence textile stock prices more than general market sentiment, leading to “decoupled” behavior where the stock moves independently of the index.
Data Collection
Data for KPR Mills Ltd. and the Nifty 50 Index were collected from the NSE website for the period 1 December 2024 to 30 November 2025.
Friday closing prices were used to calculate weekly returns.
Weekly returns of Nifty 50 were taken as the independent variable (X).
Weekly returns of KPR Mills Ltd. were taken as the dependent variable (Y).
A simple linear regression model was applied where Y was regressed on X.
Total number of observations: 48
Data Analysis
The regression equation obtained is:
Y = –0.0725 + 0.0060X
Where:
- Y = Weekly returns of KPR Mills Ltd.
- X = Weekly returns of Nifty 50
Key Results:
. Beta (β) = 0.0060
· R² = 0.0057
· F-value = 0.2644
· P-value (Significance F) = 0.6096
· Number of observations (N) = 48
The beta coefficient is positive, indicating a direct relationship between Nifty 50 returns and KPR Mills returns. However, the magnitude of beta is very small, suggesting that KPR Mills’ stock returns are weakly influenced by market movements.
The R² value of 0.0057 indicates that only 0.57% of the variation in KPR Mills’ returns is explained by changes in the Nifty 50. The remaining variation is due to firm-specific factors and other variables not included in the model.
The F-value is low and the p-value is greater than 0.05, indicating that the regression model is not statistically significant. Hence, the relationship between Nifty 50 returns and KPR Mills returns is weak and statistically insignificant.
Conclusion
The analysis shows that KPR Mills Ltd. has a low and statistically insignificant beta with respect to the Nifty 50. This indicates that the stock is less sensitive to market fluctuations and behaves more independently of overall market movements.
Since the beta value is significantly less than 1, KPR Mills Ltd. can be considered a defensive stock, making it more suitable for risk-averse investors and long-term investment strategies rather than short-term market-driven trading.