Introduction –
Vadilal Industries Ltd is an Indian ice cream and flavoured milk manufacturer. The company is also one of the largest processed food manufacturers in India with significant exports of frozen vegetables and ready to eat snacks, curries, and breads.
Vadilal offers a large range of ice creams in the country with multiple flavors and packs, across forms (cones, candies, bars, ice-lollies, small cups, big cups, family packs, and economy packs). In addition to a supermarket presence, Vadilal also has a retail presence through its chain of Happinnezz ice-cream parlour, which are run through a franchisee model. Since Vadilal started by catering to the people of Gujarat, all their products are vegetarian and do not use eggs.
Vadilal Industries has two ice cream production facilities – one at Pundhra in Gandhinagar district, Gujarat and the other one at Bareilly in Uttar Pradesh. It has a distribution network of 50,000 retailers, 250 SKUs (stock keeping units), 550 distributors, 32 CNF and 250 vehicles for delivery of goods.
Objective
To calculate β & find its significance
Data collection
The data was gathered from a secondary source, the NSE’s official website. Data on the NSE’s daily closing stock price & the Vadilal has been gathered. The data has been narrowed down to the weekend (Friday) closing price only.
Data Analysis
Regression Statistics
Multiple R 0.239675
R Square 0.057444
Adjusted R Square 0.053613
Standard Error 78.50437
Observations 248
Interpretations:
Here, we can observe that the R square value is 0.057444, which means that 5.74% of weekly returns of Vadilal industries can be explained by Nifty.
We can infer that to the given extent Vadilal does follow the Nifty trend.
ANOVA
df SS MS F Significance F
Regression 1 92397.56854 92397.57 14.99246 0.000138
Residual 246 1516082.099 6162.935
Total 247 1608479.667
Interpretations:
H0: Nifty is not influencing the weekly returns of Vadilal
H1: Nifty is influencing the weekly returns of Vadilal
Here as the F value is 14.99246 which is more than 4, thus we reject the null hypothesis & accept the alternate hypothesis, concluding that nifty is influencing the weekly returns of Vadilal.
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 739.2919 68.1186838 10.853 1.12E-22 605.1217 873.4622 605.1217 873.4622
X Variable 1 0.015951 0.004119612 3.87201 0.000138 0.007837 0.024065 0.007837 0.024065
Interpretations:
We can observe here that the Beta value is 0.843596 meaning that 1 unit change in Nifty leads to 0.843596 change in weekly returns of Vadilal. Also, the value of beta is positive indicating the presence of a positive relationship between the two variables.
The P value is 1.12E-22 which is less than 0.05, thus the model is significant at 95% confidence interval.