Title: Relationship of Varun Beverages Limited with Nifty50
Author: Vaishnavi Kulkarni
Introduction: Varun Beverages Limited (VBL) is an Indian multinational company that is primarily engaged in the production, bottling, and distribution of a wide range of beverages under the PepsiCo brand, including carbonated soft drinks, fruit juices, and bottled water. It is one of the largest franchisees of PepsiCo in the world, outside the United States. The company holds a significant market share in the Indian beverage industry, around 44% as of 2019. It has shown strong performance on the Nifty 50, with its stock price rising over 20% this year, significantly outperforming the index.
Objective: To find out Beta (β) of Varun Beverage Limited and its significance.
Data Collection:
The Data was collected of Varun Beverage Limited and nifty 50 and downloaded from NSE website from 1st May 2023 to 30 April 2024. The data was manipulated to find Friday closing prices. The Weekly return of nifty was termed as “x” and Varun Beverage Limited was termed as “y” by using
Weekly return formula= (Yt+1-Yt)/Yt *100 and then we Y regressed on X.
Data analysis:
Regression equation:
Weekly return of Varun Beverage Limited= 1.79+(-2.50) weekly return of nifty 50
Y= 1.79+(-2.50) X
(t-stat= -1.58), N= 48, R square= 0.052, F=2.50, P value=0.12
The above equation shows the relationship between nifty50 and weekly returns of Varun Beverage Limited. Negative sign before coefficient of weekly return of nifty 50 means there is a negative relationship if nifty rises by one unit your company will fall by 2.50 unit and if it falls by 1 unit, it rises by 2.50 unit.
This figure in bracket is t-stats as ( -1.58) for beta. The p value for which is 0.12 which is more than 0.05 meaning beta is not statistically significantly.
N=48, R2=0.052 which means 5.2% of Varun Beverage Limited are explained by Nifty 50. Other 94.8% is not explained in the model.
F=2.50 and p value is 0.12, which is more than 0.05 meaning overall model is not statistically significant.
Conclusion:
As per the given data of relationship of Varun Beverage Limited with Nifty 50, we know that beta value is less than 1 and negative meaning company is not good for investment. Investment in this company not beneficial