Title : Relationship of Nifty with Patanjali Ltd
Author: Priyanka Naik
Introduction:
Patanjali Ayurved Limited, founded in 2006 by Yoga Guru Baba Ramdev, has rapidly emerged as a formidable player in India’s fast-moving consumer goods (FMCG) sector. The company offers a diverse range of products, including hair care, skin care, dental care, home care, personal care, dairy products, and bulk trading of food products. Patanjali’s unique selling propositions—emphasizing natural ingredients, affordability, and indigenous production—have significantly contributed to its widespread consumer acceptance.
Objective:
The objective of this study is to determine the beta value of Patanjali Ayurved’s limited relative to the Nifty 50 index. Beta measures the stock’s volatility compared to the market. This analysis will help investors assess the risk associated with patanhali and make informed investment decisions.
Literature Review:
Patanjali’s Market Dominance The Role of Marketing Strategy and Brand Positioning :
Ahuja, Shekhar, and Sharma (2020) analyzed Patanjali’s rapid ascent in the Indian FMCG market, attributing its success to a well-crafted marketing mix strategy and a brand image centered around natural and indigenous products. Their study highlighted the company’s ability to resonate with consumers seeking Ayurvedic and herbal alternatives, leading to substantial market penetration.
Patanjali’s Disruptive Impact on the Indian FMCG Sector Strengths and Challenges :
Ahmed, Sultana, and Ahmed (2018) examined Patanjali’s disruptive impact on the Indian FMCG landscape. They identified strengths such as product diversity, competitive pricing, and efficient process utilization. However, the study also pointed out areas needing improvement, including manufacturing facilities, product quality, and distribution networks, to sustain growth amidst increasing competition.
Data Collection:
Patanjali and Nifty50 data was download for period 1-1-24 to 31-12-24 and data was manipulated to find out the Friday closing prices were calculated of Nifty50 = X and Patanjali = Y, Y was regression on X
Data Analysis:
1. Regression Equation:
Y=0.061946312+0.880780328X
Interpretation:
he regression analysis reveals that there is a statistically significant relationship between the independent variable X and the dependent variable Y, as indicated by the p-value for X (0.0298), which is below the 0.05 threshold. The regression equation is Y=0.0619+0.8808XY = 0.0619 + 0.8808XY=0.0619+0.8808X, meaning that for every unit increase in X, Y is expected to increase by 0.8808 units. However, the R2R^2R2 value of 10.07% suggests that only a small portion of the variation in Y is explained by X, indicating that other factors may be influencing Y. While the overall model is statistically significant, as shown by the F-statistic (5.0374) and its significance (0.0298), the low R2R^2R2 indicates that the model’s explanatory power is limited, and further variables may be needed for better predictive accuracy.
Conclusion:
Since the Beta (0.880) is less than 1, it indicates that Patanjali Ayurved’s is preferrable for Long-term investment
References:
Ahuja, Y., Shekhar, S., & Sharma, J. (2020). Unravelling the brand ‘Patanjali’ – study of a flourishing Ayurvedic brand in India. International Journal of Business and Globalisation, 24(1), 39-56.
Ahmed, J. U., Sultana, H., & Ahmed, A. (2018). Patanjali Ayurved invades India. DECISION: Official Journal of the Indian Institute of Management Calcutta, 45(1), 75-91.