Title: Relation of Safari Industries Limited with NIFTY 50
Author: SK MEHEBUB ALI
Introduction:
Safari Industries Limited is a leading manufacturer and retailer of luggage and travel accessories in India. Established in 1974, the company has positioned itself as a strong competitor in the luggage industry, offering a diverse range of products including hard and soft luggage, backpacks, and travel accessories. Competing with brands like VIP Industries and American Tourister, Safari has focused on product innovation, brand expansion, and an optimized distribution network to strengthen its market presence. The company has experienced significant growth, leveraging both offline and online sales channels to enhance its consumer reach. Given the dynamic nature of the stock market, this study aims to analyze the relationship between Safari Industries’ stock performance and the NIFTY 50 index to determine its market sensitivity.
Objective:
To find out the Beta of Safari Industries and assess its significance in relation to NIFTY 50.
Literature Review:
Strategic Growth and Competitive Positioning of Safari Industries
Ghosh and Patel (2021) examine the strategic initiatives and market positioning of Safari Industries in their study Safari Industries Ltd. – Driving Through the Fast Lane? published in Emerald Emerging Markets Case Studies. The authors highlight how the company has evolved in response to changing consumer preferences and increasing competition. Their research discusses Safari’s expansion strategies, including product diversification, enhanced brand visibility, and an optimized distribution network. By analyzing Safari’s market position against competitors such as VIP Industries and American Tourister, the study underscores the brand’s efforts to balance affordability and quality. The findings suggest that while Safari has made significant progress, sustaining long-term growth requires continuous innovation and customer engagement.
Financial and Operational Performance of Safari Industries
Sharma (2018), in the research report Safari Industries (India) Ltd. by StockAxis, provides an in-depth analysis of the company’s financial performance and operational strategies. The report highlights the transformation of Safari Industries under new management in 2012, which focused on restructuring the product portfolio and improving operational efficiency. The study details the company’s growth trajectory, manufacturing capabilities, and its efforts to strengthen brand recognition. Financial indicators such as revenue growth, profitability trends, and return on investment are discussed, offering insights into the company’s stability and potential for future expansion. The research concludes that Safari Industries has shown resilience in a competitive market but must continue leveraging innovation and cost-efficiency to maintain its upward trajectory.
Data Collection:
The stock data of Safari Industries Limited and NIFTY 50 was collected for the period from January 1, 2024, to December 31, 2024. To standardize the analysis, weekly Friday closing prices were extracted. Safari Industries’ weekly return (Y) was regressed against NIFTY 50’s weekly return (X) to determine their relationship.
Data Analysis:
Regression Equation:
Safari Industries Return = 0.6354 + 0.3092 (NIFTY 50 Return)
Interpretation:
The regression equation (Y = 0.6354 + 0.3092X) describes the relationship between NIFTY 50’s weekly return (X) and Safari Industries’ weekly return (Y), indicating that Safari Industries’ return is the dependent variable, while NIFTY 50’s return is the independent variable.
- The positive coefficient of 0.3092 suggests that for every 1-unit increase in the weekly return of NIFTY 50, the weekly return of Safari Industries is expected to increase by 0.3092 units.
- With 47 observations (N = 47), the model’s R-squared value is 0.0116, implying that only 1.16% of the variationin Safari Industries’ weekly returns can be explained by changes in NIFTY 50’s weekly returns. This means that 98.84% of the variation in Safari Industries’ returns is due to other factors not included in the model.
- The p-value for the slope is 0.4717, which is significantly greater than the conventional threshold of 0.05. This indicates that the relationship between NIFTY 50 and Safari Industries’ weekly returns is not statistically significant at the 5% level.
- Consequently, this model does not provide strong evidence to suggest a significant linear relationship between NIFTY 50 and Safari Industries’ stock returns. Other market and company-specific factors likely have a more substantial influence on Safari Industries’ performance.
Conclusion:
Safari Industries’ beta of 0.3092 suggests that its stock has a low correlation with NIFTY 50 and is relatively less volatilethan the overall market, making it more suitable for long-term investors rather than short-term traders.
References:
- Ghosh, R., & Patel, S. (2021). Safari Industries Ltd. – Driving Through the Fast Lane? Emerald Emerging Markets Case Studies. Retrieved from https://www.sciencegate.app/document/10.1108/eemcs-03-2020-0088
- Sharma, A. (2018). Safari Industries (India) Ltd. StockAxis Research Report. Retrieved from https://stockaxis.com/Research-Reports/Safari-Industries-India-Ltd-MB-10-08-2018.htm
