Relationship between Nifty 50 and S H Kelkar and Company Limited
Author-Sanskruti Patil(38)
Introduction:
S H Kelkar and Company Limited is a leading Indian company in the fragrance and flavour industry, established in 1955 and headquartered in Mumbai. It manufactures and supplies aroma chemicals, fragrances, and flavours used in personal care, food, beverages, and household products. The company is listed on NSE and BSE and is known as one of the largest Indian-origin fragrance companies.
Objective-To calculate Beta and observe its significance.
Literature Review-
1)Market Leadership and R&D Capabilities
This review analyzes S.H. Kelkar’s position as the largest Indian-origin player in a market traditionally dominated by global MNCs (like Givaudan and IFF). According to research by Motilal Oswal (2025), the company’s primary strength lies in its deep understanding of local consumer palettes and its high backward integration. The review highlights that SHK is the only Indian company to file patents for novel aroma molecules, earmarking approximately 3% of its revenue for R&D. This technical moat allows them to create customized, cost-effective formulations for FMCG giants, giving them a “wallet share” of nearly 40% with domestic players.
2)Global Expansion
This review focuses on S.H. Kelkar’s transition from a domestic leader to a global contender. Analysis by Progressive Shares (2024) examines the company’s aggressive acquisition strategy, specifically the integration of Holland Aromatics and Creative Flavours & Fragrances (Italy). The literature suggests that these acquisitions were not just for revenue scaling but for “premiumization”- accessing European formulation expertise and high-end fine fragrance markets. The review notes that while these moves increased geographical diversification, they also introduced margin pressures due to the higher cost of operations in European hubs compared to the Vapi or Mumbai.
Data Collection-data collection for Nifty 50 and SH Kelkar & company Ltd was downloaded from nseIndia.com for period 1/1/2025 to 31/12/2025, the data was manipulated to get the Friday closing price of nifty 50 and SH Kelkar & Company ltd weekly returns was calculated, weekly return of nifty fifty are name as X and weekly return of nifty 50 are name as Y, Y was regressed on X.
Data Analysis
The following data was derived for the taken time period:
Y = a +bX
Y = 0.6907 + 1.1191X
No of observation: 50
Intercept: 0.6906
Beta (X Variable): 1.1191
t Stat (Beta): 4.9443
R Square: 0.3470
F: 24.4465
P value: 1.1E-05 (Since P < 0.05, the relationship is statistically significant)
The positive beta value indicates a direct relationship between market returns and company returns, meaning that when NIFTY returns increase, the returns of S.H. Kelkar also tend to increase, and vice versa. Since the beta is greater than one, the stock is considered more volatile and more sensitive to market movements compared to the overall market.
Furthermore, the coefficient of determination (R² = 0.3470) suggests that approximately 34.70% of the variation in the company’s returns is explained by changes in NIFTY returns, while the remaining 65.30% is influenced by other company-specific and external factors such as industry performance and economic conditions. The p-value of 0.000011, which is lower than the standard significance level of 0.05, indicates that the regression model is statistically significant and that market returns have a meaningful impact on the company’s returns. Overall, the analysis shows that S.H. Kelkar and Company Limited exhibits a positive correlation with the market and demonstrates relatively higher risk due to its greater sensitivity to market fluctuations.
Conclusion:
Since the Beta of S H Kelkar is 1.11, the stock is more volatile than the market. It is suitable for short-term investment during bullish conditions, but investors should be cautious during market downturns.
Refrences–
Progressive Share Brokers. (2024, February 7). Equity Research: The S H Kelkar and Company Limited (SHK)
Motilal Oswal Financial Services. (2025). Institutional Equities: S H Kelkar & Company Ltd.