Title – Relationship of Sun Pharmaceuticals Industries Ltd with Nifty 50
Author – Sahil Suresh Sawardekar
Introduction –
Sun Pharmaceutical Industries Limited (d/b/a Sun Pharma) is an Indian multinational pharmaceutical company headquartered in Mumbai, that manufactures and sells pharmaceutical formulations and active pharmaceutical ingredients (APIs) in more than 100 countries across the globe.
It is the largest pharmaceutical company in India and the fourth largest specialty generic pharmaceutical company in the world. The products cater to a vast range of therapeutic segments covering psychiatry, anti-infectives, neurology, cardiology, diabetology, gastroenterology, ophthalmology, nephrology, urology, dermatology, gynaecology, respiratory, oncology, dental and nutritional’s.
Sun Pharmaceutical Industries Ltd. was established by Dilip Shanghvi in 1983 in Calcutta, West Bengal with five psychiatry products and a two-person marketing team. Today it is ranked number one in share of prescriptions with 12 classes of doctors in India and a market leader in Psychiatry, Neurology, Cardiology, Orthopaedics, Gastroenterology, Nephrology, Diabetology, Dermatology, Urology, ENT, Chest and Consulting Physicians.
The 2015 acquisition of Ranbaxy made Sun Pharma the largest pharma company in India, the largest Indian pharma company in the US, and the 5th largest specialty generic company globally.
Objective – To find out beta of your company and its significance.
Data Collection –
Data for Nifty 50 and Sun Pharmaceuticals was downloaded from NSE site for the period of 01/04/2023 – 31/03/2024. The data was manipulated to get Friday closing prices and weekly returns were calculated by the formula (Yt1 – Yt) / Yt*100.
Weekly returns of Sun Pharmaceuticals were regressed on weekly returns of Nifty 50.
Data Analysis –
Equation –
Weekly returns of Sun Pharmaceuticals = – 0.71+0.64 ( intercept + weekly returns of nifty 50)
N = 46, R2 = 0.115, F = 5.737, P value = 0.02
The above equation states the relationship between Nifty 50 and Sun pharmaceuticals.
The positive sign before 0.64 (weekly returns of Nifty 50). This positive sign indicates, if Nifty rises, Sun Pharmaceuticals will also rise and vice versa.
The coefficient of Nifty 50 has t-stat = 2.3952 and the P value of which is 0.02, it is less than 0.50 which indicates Nifty 50 is statistically significant to increase the prices of Sun Pharmaceuticals.
R2 = 0.115 it indicates that 11.5% of Sun Pharmaceuticals prices are explained by Nifty 50 rest 88.5 % depends upon other fundamentals.
F = 5.737 and P value = 0.02 which is less than 0.05, it indicates the overall model is statistically significant.
Conclusion-
The Beta value = 0.64 is less than 1 and positive.
Beta value = 0.64 < 1. It indicates that Sun pharmaceuticals Industries Ltd. Is “Good for long term investments”.