Author- Vishwesh Chouksey
Introduction- Varun Beverages Limited has recently seen volatility in its share price. As of October 7, 2024, the stock price is around ₹132.19, showing a decrease of about 5% in recent trading. Despite this short-term dip, the stock has performed well over the past year, delivering a return of approximately 48.78%. It is considered a long-term investment by some analysts due to its strong financial standing, with a market capitalization of ₹70,033 crore and net profits exceeding ₹3,000 crore. However, opinions vary; while some analysts suggest potential for moderate growth, others highlight risks due to market volatility and issue “sell” ratings. In summary, Varun beverages presents an option for investors with a long-term perspective, but those seeking short-term gains may want to consider its volatility and market risks.
Objective- To find out the Beta value of Varun Beverages Limited and it’s Significant.
Data collection- Historical data of Varun Beverages Limited and Nifty 50 has been collected from the NSE website with the time period of 1st May,2023 to 30th April ,2024. The data had been somewhat manipulated to get only Friday closing price, weekly returns of my company and the same for the nifty 50. The first weekly return value has been taken as X for nifty 50 and Y for the Varun Beverages Limited. The next weekly return value has been calculated using excel formula, then at last my company i.e. Varun Beverages Limited has been regressed on nifty 50.
Data analysis: Regression equation; Y (intercept)= Varun Beverages Limited + Nifty 50
Relationship pf Nifty 50 and Varun Beverages Limited = 1.794-2.496(-1.580{t-stat})
N=48, R^2=0.0515, F value=2.499, Significance F (P-value) =0.121.
Interpretation: The above equation shows the relationship between weekly returns of Nifty 50 and Varun Beverages Limited. The negative (-) sign before the co-efficient of Nifty 50 tells that if Nifty 50 rises, Varun Beverages Limited will also rise and vice versa. If Nifty rise by 1 unit, Varun Beverages Limited will rise by (-2.499) unit. The figure in the bracket is t-stat for beta and the p-value for which is 0.121, which is less than 0.5, which means that beta is statistically significant at 5% level.
R^2=0.0515 which means 5.15% of SAIL returns are explained by Nifty 50, the balance 94.85% is due to fundamental.
F=2.499 and P value=0.121, which means that overall model is statistically significant at 5% level.
Conclusion- As per the given data of RELATIONSHIP OF VARUN BEVERAGES LIMITED WITH NIFTY50. We come at the conclusion that the Beta value < 0 and negative, which means that we should avoid this company for investment, as it may be problematic .