RELATIONSHIP OF VARUN BEVERAGES WITH NIFTY50
Author: Vinay Gadekar
Introduction: Varun Beverages Limited (VBL) is a major player in the beverage industry and one of PepsiCo’s largest franchisees outside the US, manufacturing, distributing, and selling a wide range of carbonated and non-carbonated PepsiCo beverages, including brands like Pepsi, Mountain Dew, 7Up, Tropicana, and Aquafina, both in India and internationally.
Objective: To find out the Beta of Varun Beverages and its significance.
Literature Review:
Growth and Transformation of India’s FMCG Market
T.T. Karthik & T.P. Ram Prasad (2020) states that India’s FMCG market, valued at $327 billion with 12-15 million outlets, has witnessed 21.4% growth from 2010 to 2014, surpassing GDP growth. Key drivers include rising incomes, urbanization, growing working-class population, and increased brand consciousness. While traditional kirana stores dominate 98% of sales, e-commerce is rapidly emerging. Global brands gained traction post-liberalization in 1991. Despite challenges, India’s retail sector holds immense potential. Consumers are expected to increase brand usage from 15 to 30 brands by 2021. To succeed, FMCG firms must adapt to changing consumer preferences and leverage innovation for sustained growth.
Impact of Social Media Marketing on India’s FMCG Market
Ujjwal Dave (2016) emphasizes that social media marketing holds immense potential in India’s FMCG sector, influencing 94% of buyers through ads. While most users engage with sponsored ads and share content, few participate in campaigns or write reviews. Daily social media users are 1.5 times more likely to purchase FMCG products influenced by ads, with men being more responsive than women. Businesses must leverage social media effectively to build customer relationships, enhance brand visibility, and improve products. Developing intelligent communication strategies through social media can help FMCG manufacturers sustain and expand their market position.
Data Collection: Varun Beverages and NIFTY50 data was downloaded from NSE site for the period 01-01-2024 to 31-12-2024 and the data was manipulated to find out the Friday closing prices. Weekly returns were calculated, weekly return of NIFTY50 is x and weekly return of Varun Beverages is y. y was regressed on x.
Data Analysis:
The equation is Equity = -0.881 + 0.117 NIFTY50
(-0.628)
Number of Observations (N) = 47, F = 0.019, R Square = 0.0004
Interpretation:
The above equation shows the relationship between NIFTY50 and Equity. Equity is a dependent variable and NIFTY50 is an independent variable. Positive sign means there is direct relationship between equity and NIFTY50 meaning if NIFTY50 rises, equity rises and if NIFTY50 falls equity falls. If NIFTY50 rises by 1 rupee, equity will rise by 0.117 units. Figure in bracket () is t-stat and the p value for this is 0.532 which is more than 0.05 meaning NIFTY50 is not statistically significant at 5% level. Number of observations are 47, r2 = 0.0004 which means 00.04% of equity is explained by NIFTY50, balance 99.96% is the error model. F= 0.019 and the p value or the significance value is 0.889 which is more than 0.05 which means overall the model is not statistically significant at 5% level.
Conclusion:
The beta value is 0.117, which is less than 1, meaning it is good for long term investment.
References:
T.T. Karthik & T.P. Ram Prasad, 2020. “SWOT (Strength, Weakness, Opportunities and Threats) Analysis of Fast Moving Consumer Goods (FMCG) Industries in India,” Shanlax International Journal of Commerce, Shanlax Journals, vol. 8(1), pages 92-100, January.
Ujjwal Dave, 2016. “Impact of social media marketing on FMCG sector in India,” Proceedings of Business and Management Conferences 3405808, International Institute of Social and Economic Sciences.