Reliance Company Case Study

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A STUDY ON THE HISTORICAL PRICE OF
RELIANCE CAPITAL LTD.

Submitted to JINDAL GLOBAL BUSINESS SCHOOL, O.P.JINDAL GLOBAL UNIVERSITY in partial fulfilment of the requirements for degree of MASTER OF BUSINESS ADMINISTRATION

BY

KIRTI SINGLA
JGU ID-20142022

INTRODUCTION
Reliance Capital Ltd. is a part of the Reliance Group. It is a constituent of CNX Nifty Junior and MSCI India. In the private sector, it is one of the leading financial services companies in India.
The business mix of the company is-
Asset management Mutual fund, Pension fund, Offshore fund, Portfolio management
Insurance Life Insurance, General Insurance
Commercial Finance Mortgages, Loans against property, SME Loans, Loans for vehicles, Loans for construction equipment,
…show more content…
NIFTY-
The total risk associated with a particular stock constitutes-
• Unsystematic risk- Company specific risk that can be diversified.
• Systematic risk- Risk arising from macroeconomic factors, which cannot be diversified.
Beta (β) is the measure of systematic risk. It indicates the extent to which market volatility impacts the price of a stock. It is used to compare the volatility of various stocks.
Higher the Beta value, higher will be the responsiveness of security price to changes in market. If β>1, it shows the aggressiveness of the security.
The following is beta calculation for RCL. It was calculated by regression analysis as well as using the historical stock price. From Regression (Yearly) From Data Intercept βN= 0.30 0.24 βRCL= 2.74 2.19 -0.37

The β value for Reliance Capital Ltd. is found out to be 2.74. This shows that a 1% change in market return will be followed by a 2.74% change in the security return. As the beta here is greater than one, it shows that RCL is an aggressive stock and is market oriented. If the market index (NIFTY) increases or decreases, the stock will quickly respond to those movements. Hence the stock is suited for

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