Beta in Valuation: The Complete Analyst’s Guide | Regression & Bottom-Up Beta

Beta is one of the most important inputs in valuation and financial modeling.

In this video, we explain beta in valuation, how analysts calculate beta using regression, and why many professionals prefer bottom-up beta when estimating beta for DCF valuation.

If you have ever wondered:

• How beta is calculated
• Why beta numbers differ across Yahoo Finance, Bloomberg, and Capital IQ
• When regression beta becomes statistically unreliable
• Why analysts sometimes prefer bottom-up beta

this video will walk you through the complete analyst approach to beta estimation.

Using two real examples (HUL and Paytm), we show how regression beta works, how to interpret R², standard error, and t-statistics, and how to decide whether a beta estimate can be trusted.

We also explain how analysts estimate bottom-up beta using peer companies, unlevering and relevering beta to estimate the correct beta for valuation and DCF modeling.

If you are preparing for careers in:

Chapters
00:00 Introduction
01:28 What Beta Measures
04:56 Data & Regression Setup
09:00 Running Beta Regression in Excel
11:00 HUL Regression Example
19:15 Paytm Example (When Regression Fails)
21:30 Excel and AI Prompt Why Betas Differ Across Websites
23:00 Limitations of Regression Beta
23:46 Bottom-Up Beta Explained
24:50 Unlevering and Relevering Beta Example
29:00 Conglomerate Beta Example
31:00 Key Takeaways

🤖 AI Prompt
Try this prompt with your own stock data to estimate beta using regression.------------------------------------------------
You are a financial analyst. Estimate the beta of a stock for valuation using regression analysis.

Steps:1. Convert stock prices and market index prices into returns
Return_t = (Price_t / Price_{t-1}) - 1

2. Run regression: Stock Return = α + β × Market Return + ε

3. Report:• Beta• Alpha• Standard error• t-statistic• p-value• R²

4. Explain whether the beta estimate is statistically reliable.

5. Show how to replicate this regression in Excel using:

Data → Data Analysis → Regression

6. Also provide the covariance formula:
β = Cov(R_stock , R_market) / Var(R_market)

Dataset:[paste stock and market data here]

--------------------------------------------------------------------
Connect With Me
LinkedIn:
https://linkedin.com/in/motwaniricha
Instagram:
https://instagram.com/motwaniricha
TopMate 1:1 Consultation:
https://topmate.io/richa_motwani

This video clarifies the concept of beta in finance, detailing its formula and how it applies to calculating the cost of equity. We cover data preparation for regression analysis, including sources like NSE and Google Finance, and common data issues. Understanding these elements is essential for accurate data analysis and informed financial management.

#CorporateFinance
#DCFValuation
#financialmodeling
#beta

Видео Beta in Valuation: The Complete Analyst’s Guide | Regression & Bottom-Up Beta канала Richa Motwani