Title: The relationship between the weekly returns of VIP industries Ltd. and NIFTY 50 market.

Author: Vaibhav Parab (37), K.B.S., M.M.S. Batch (A)-2018-20

Introduction: VIP Industries Ltd is an Indian luggage maker which is the world’s second largest and Asia’s largest luggage maker based in Mumbai, Maharashtra, India. The first VIP suitcase was manufactured in 1971. Since then, VIP Industries has sold over 60 million pieces of luggage. The company has more than 8,000 retail outlets across India and a network of retailers in 50 countries. It acquired United Kingdom luggage brand Carlton in 2004. The company is under the leadership of Piramal family, with Radhika Piramal as the vice chairperson. Company’s stock traded in NSE is symbolized as ‘NSE: VIPIND’.

Objective: To calculate the Beta (β) of the VIP industries Ltd. and its significance.

Reviews: The Industrial Safety and Health Council presented VIP Industries with The Safety Award. VIP Industries was presented with the award for ‘Best Paper Value Engineering – Invest’ by the Indian Value Engineering Society. VIP Industries are the proud winners of the prestigious Lakshya Award from NITIE (National Institute of Industrial Engineering) for ‘Best Project’ in the field of ‘Supply Chain Management’ in the year 2000.The Lakshya Award is considered to be esteemed, as it is conferred upon visionaries and is a recognition of those who have helped to revolutionize the future of the Indian business setting. In 2004, VIP Industries were conferred with the Golden Peacock Award for Innovation. VIP Industries were the joint winners of the ‘Rajiv Gandhi National Quality Award’ in 2003, for being one of the best Large Scale Manufacturing Industries in India. ‘Indian Value Engineering Society’ bestowed VIP Industries with the second place for presenting a paper, titled, ‘A Case Study on Optimization Cost and Enhance Aesthetics of PVC Outer Strips’.

Data collection: The procedures to be followed were as:

  • The historical prices data of stock of VIP industries Ltd. and NIFTY 50 were downloaded from the NSE website for the period February 1, 2018 to January 31, 2019.
  • Closing prices on Friday of each week were considered as weekly price base of both.
  • Returns were calculated as percentage change per week of the prices of both.
  • Returns of VIP industries Ltd. were named as ‘Y’ and returns of NIFTY 50 index as ‘X’. Regression analysis was found between ‘X’ and ‘Y’.

Data Analysis: After formulating the regression table, the following values were found:

The regression equation to be framed as Ŷ= 0.8825 + 2.2602X

The above equation shows the relationship between the closing prices of VIP industries Ltd. and NIFTY 50 index. If the price of NIFTY 50 index rises by 1 unit, then the price of VIP industries Ltd. rises by 2.26 units.

  • Observations (N) = 48
  • R² = 0.3712
  • F-stat= 27.1643, P-value= 4.30
  • Standard error= 5.4361, t-stat= 5.2119

Only 37.12% of VIP industries Ltd. closing price is explained by NIFTY 50 index.

F-stat= 27.1643 and value of P is greater than 0.05 (P>0.05) hence the model is not statistically significant at 5% level.

Conclusion: After evaluating the company, this model is not good to invest. Risk factor of using this model for forecasting VIP industries Ltd. weekly returns are very high.