CHAPTER-1

INTRODUCTION

1
 CHAPTER 1

INTRODUCTION

1.1 INTRODUCTION:

The topic “A study on risk and return analysis of 5 pharma companies” stock in the

pharmaceutical industry has been selected because of lot of investors are building

investments in shares of different companies. And the 5 companies are selected because they

are the key drivers and they provide more weight for the progress of nifty index. Before

1990s the principal territory speculation was bank demand, gold, property and such different

types of extensive resources. In any case, for recent years we are seeing part of ventures

openings coming up as essential and supplementary advertising since the globalization,

which had its investigation amid 1990's outside capital streaming it India, new multinational

enters the market and a great deal of speculation openings were interested in the general

population who kept their keep funds in banks and different sorts of settled resources. The

investors have to be aware of the risks involved in making investments. So, the Investors

have to compute the beta and correlation co-efficient to know the current condition of the

stock its relation with market index and do the stocks are capable to generate returns for their

investments. The importance of risk-return relationship is advocate from both investors and

firms. Evaluate the relationship between expected rate of return and the risk of asset would

help investors to make enhanced and more accurate decision on investing in different

industries. To this reason, the evaluation has audited the risk return relationship and

strategies for estimating, hypotheses and experimental review to build up an execution

measures complementary distinctive industry parts. The empirical evidences were discussed

within the scope of market risks and returns. At that point, the hypotheses and open up

writing recognized with Capital Asset Pricing Model (CAPM) was investigated to

demonstrate the connection between expected return and efficient risk. Treynor Index,

Sharpe Index, and Jansen Index as performance measures were extract from CAPM model

2
and the correlation were discussed between them. As of resul

3
1.2 THEORETICAL BACKGROUND OF THE STUDY

Return is essential spurring power that drives venture. It refers to the reward for the activity

of taking risk, Hence the evaluation of return is important to understand the profitability or

the functioning of the firm.

There are two types of returns, those are the segment regularly strikes a chord when one is
contemplating return is occasional income as isolated or premium produced by the venture.
Current return is measured as the intermittent return in connection to the starting cost of the
venture.

1. Capital return: -

The second imperative part of return is reflected in the value change called the capital return.

It is basically the cost of thankfulness (or deterioration) partitioned by the starting cost of

advantage. Total return = capital return + current return

Risk

Chance alludes towards likelihood that the genuine result of a venture will concede from

expected result. All the more particularly, most speculators are worried about the genuine

result being not as much as the normal result. The more extensive scope of conceivable result

is more noteworthy the risk. The different sorts of risks are

A: Systematic risk

Efficient hazard alludes to that bit of variety consequently brought about by components that

influence the cost of all securities. The impact is . return makes the costs of all individual

securities move in same bearing. This hazard is as a matter of course and can't be controlled.

Efficient hazard emerges because of taking after element:

1. Market risk

Variety in costs started off because of genuine social, political and monetary occasions is

4
alluded to as market hazard. Showcase hazard emerges out of changes popular and supply

weights in the market taking after the changing stream of news or desire.

2. Interest risk

By and large costs of securities tend to move contrarily with changes in the rate of intrigue.

3. Risk of purchasing power

market movement and financial specialists’ recognitions are impacted by the adjustments in

the loan fees which thusly rely on upon nature of instruments, securities, stocks, and so forth.

4. Liquidation risk

The risk that comes with short term trading of stocks which may go wrong or opposite to the

speculation of the brokers or traders. This sort of hazard is essential in some venture

speculation choice yet it is talked about widely in speculation courses.

5.Foreign trade chance

Uncertainly this is the hazard related with potential changes in the remote trade estimation of

money.

B: Unsystematic risk

Unsystematic hazard alludes to that segment of hazard that is brought on because of elements

one of a kind or identified with a firm or an industry. Unsystematic hazard emerges because

of taking after components:

1. Business risk

Business hazard can be inner and in addition outside. Inside hazard is brought about because

of shameful item blend, non-accessibility of materials, nonattendance of vital administration,

and so forth. Outer hazard emerges because of progress in working conditions, change in

business laws, universal economic situations, and so forth.

2. Financial risk

Monetary hazard is related with capital structure of the organization. An organization with no

obligation financing has no budgetary hazard. The degree of money related hazard relies on

upon the use of the association's capital structure.

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1.3 RELATIONSHIP BETWEEN RISK AND RETURN:

There is certain connection between the measure of risk assumed and the amount of returns

expected. Greater the risk, the larger the expected returns and larger the chance of substantial

loss. A rational investor would have some degree of risk aversion, he would expect the risk

only if he adequately compensated for it.

The following figure shows relationship between the amount of risk assumed and amount of

expected returns.

Risk is measured along x-axis and return along y-axis. Risk increases from left to right and

return rises from bottom to top. The line 0 to R(f) indicates rate of return on risk less

investments. The diagonal curve from R(f) to E(r) illustrates the concept of expected rate of

return increasing shows a linear relationship between risk and return.

The monetary division in India has experienced many changes, especially in the capital

market Segment, since 1990s. The share price fluctuations in the market can affect the

economy of the nation. A fluctuation occurs in the price level of stock because of changes in

several factors, like economic, social and political.

A part from these factors information released by the corporate bodies causes volatile nature

sin the share prices however the corporate announcement has considerable impact on the

share price movements. Moreover, the individual investors change their investment pattern

depending upon the release of information by the corporate bodies. In other words the

corporate announcements reflect wide variations in the share prices and investors behavioral

pattern. This fact is brought into the companies regularly making significant announcement
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with positive and

7
negative information which will reflect in their prices. When corporate announcement

contains good news this stock prices go up, whereas announcements containing bad news

push the stock’s price down. Given this reality the investors can react positively or negatively

depending upon whether it is positive or negative information. Hence the market reactions

indicate that the known information is immediately discussed by all investors and it reflects in

the share prices in stock market. The information that affects the prices of securities is strikes,

lockouts, joint venture agreements, launching of the new products, financial reports include

annual and quarterly releases, press releases, declaration of dividend including interim

dividend, outcome of board of directors meeting, outcome of annual general meeting, right

issues, bonus issues, allotment of equity shares including allotment of shares under employee

stock option scheme, amalgamation, acquisition, buyback offer and sale of shares etc. Among

these various corporate announcements giving information, some are likely to be having most

significant impact on the share price fluctuation.

1.4 LITERATURE REVIEW

01) International Research Journal of Applied Finance, the review utilizes a decision behavior

model in which risk propensity and risk perception are placed between individual

characteristics and risky decision-making behavior. This mediating effect does not take place

in investment experience and risk propensity. In addition, risk perception acts as a partial

mediator when investors form expected returns based on risk propensity. traction of

portfolios.

02) Louis K. C. Chan, Jason Karce ski and Josef Lakonishok (2008); The ability to identify

which factors best capture systematic return co variation is central to applications of

multifactor pricing models. This paper uses a common data set to evaluate the performance of

various proposed factors in capturing return co movements

03) Gerry McNamara and Philip Bromiley (2009); Examining the association between

managerial assessments of risk and expected return using non-experimental data from specific

commercial lending decisions, we found that risk-return associations depended on the

measures used. However, with a return measure that accounted for the expected costs of

8
riskier decisions, risk and return were negatively related.

9
04) Yoav Ganache (2010); This article examines the relationship between judgments of risk

and judgments of expected return of financial assets. It suggests that for unfamiliar assets,

both risk and return judgments are derived from global preference toward the asset, whereas

for familiar assets

05) Franco Modigliani and Leah Modigliani (2013); The explanation commonly offered for

this trade- off between risk and return is that investors do not like risk, and therefore require

compensation for uncertainty in form of a “risk premium”. In fact, this explanation does not

provide an operational basis for assessing risk,

06) Author: Anil Sharma (2012); The purpose behind this paper is to organize and take supply

of the flow condition of research on securities trade blend by assessing the open written work,

to give quick and basic access to future researchers.

07) Author: Tariq (2017); The purpose of this paper is to examine the role of value-atrisk

(VaR) in the cross-section of stock returns in the Indian stock market during the period 1999-

2014. The paper follows the methodology of Bali and Cakici (2004) to investigate the

relationship between VaR and stock returns

08) Author: Jaspal Singh (2015); The purpose of this study is to examine the relevance of an

accounting-based fundamental strategy in adding value to value stocks in Indian stock market

09) Author: Anita Tripathi (2015); This study concludes that some individual characteristics,

such as risk preference, are transmitted to investment decision behavior through the mediating

effects of risk propensity and risk perception, affecting investors' expected returns and

construction of portfolios,

10) Author: Saumya Ranjan (2012); The study points toward the need for more careful

understanding of managerial definitions of risk and return, careful handling of leads and lags,

and understanding risky decisions in their organizational and market contexts. Null return

variation in the presence of other market wide risk factors.

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11) Author: Saumya Ranjan Dash (2012); This paper uses a common data set to evaluate the

performance of various proposed factors in capturing return co movements. Factors associated

with the market, size, past return, book-to-market, and dividend yield help to explain return.

12) Author: Abdul Rahman (2010); study on objective of the present audit is to describe the

written work and to give the total index on securities trade blend and to separate the

revelations and eventual outcomes of the surveys thought about for review.

13) Author: Surrender S. Yadav (2010); The motivation behind this paper is to survey the

enlightening productivity of S&P CNX Nifty record choices in Indian securities advertise.

The S&P CNX Nifty file is a main stock file of India, comprises of 50 most as often as

possible exchanged securities recorded on NSE.

14) Author: Imlek Sheikh; The study points toward the need for more careful understanding

of managerial definitions of risk and return, careful handling of leads and lags, and

understanding risky decisions in their organizational and market contexts.

15) Author: Varun Dewar (2015); The reason for this paper is to look at the relative predictive

abilities of current earnings (and its components) and cash flows for next period cash flows in

case of Shariah- compliant companies in India. Index companies as its sample for a period of

10 years for conducting the analysis.

16) Preeti Singh (1986); disclosed the basic rules for selecting the companies to invest in. she

opined that understanding and measuring return and risk is fundamental to the investment

process. According to her, most investors are risk averse. To have a higher return the investor

has to face greater risks.

17) David.L. Scott and William Edward (1990); reviewed the important risks of owning

common stocks and the ways to minimize these risks. They commented that the severity of

financial risk depends on how heavily a business relies on debt.

Fredrick S Hiller; The evaluation of proposed investment is based on the amount of risk involved

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 CHAPTER-2

INDUSTRY AND COMPANY PROFILE

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 CHAPTER 2

INDUSTRY AND COMPANY PROFILE

2.1 Sun Pharma:

Sun Pharmaceutical Industries Ltd. (Sun Pharma) is the fourth largest specialty generic
pharmaceutical company in the world with global revenues of over US$ 5.1 billion. Supported by
more than 40 manufacturing facilities, we provide high-quality, affordable medicines, trusted by
healthcare professionals and patients, to more than 100 countries across the globe.

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, and
nutritionals.]Its active pharmaceutical products include baricitinib, brivaracetam, and dapagliflozin.

Sun Pharma has complemented growth with select acquisitions over the last two decades. In 1996, Sun
purchased a bulk drug manufacturing plant at Ahmednagar from Knoll Pharmaceuticals and MJ
Pharma's dosage plant at Halol that are both U.S. FDA approved today. In 1997, Sun Pharma acquired
Tamil Nadu Dadha Pharmaceuticals Limited (TDPL) based in Chennai, mainly for their
extensive gynaecology and oncology brands. Also in 1997, Sun Pharma initiated their first foray into
the lucrative US market with the acquisition of Caraco Pharmaceuticals, based in Detroit.

In 1998, Sun acquired a number of respiratory brands from NATO Pharma.

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History of Sun Pharma:

Sun Pharmaceuticals was founded by Dilip Shanghvi in 1983 in Vapi, Gujarat, with five products to
treat psychiatry ailments. Cardiology products were introduced in 1987 followed
by gastroenterology products in 1989. Today it is ranked number one by prescriptions with nine
different specialties of doctors in India and a market leader in cardiology, gastroenterology,
ortho, diabetology, dermatology, urology, vitamins, minerals, and nutrients.

The 2014 acquisition of Ranbaxy made Sun Pharma the largest pharma company in India, the largest
Indian pharma company in the US, and the 4th largest specialty generic company globally.

Over 72% of Sun Pharma sales are from markets outside India, primarily in the United States. The US
is the single largest market, accounting for about 30% of the company's turnover; in all, formulations
or finished dosage forms, account for 93% of the turnover. Manufacturing is across 44 global locations
in India, the US, Asia, Africa, Australia and Europe. In the United States, the company markets a large
basket of generics, with a strong pipeline awaiting approval from the U.S. Food and Drug
Administration (FDA).

Sun Pharma was listed on the stock exchange in 1994 in an issue oversubscribed 55 times. The
founding family continues to hold a majority stake in the company.

2.2 DR REDDY'S LAB:

Dr. Reddy's Laboratories is an Indian multinational pharmaceutical company based in Hyderabad. The
company was founded by Kallam Anji Reddy, who previously worked in the mentor institute Indian
Drugs and Pharmaceuticals Limited. Dr. Reddy manufactures and markets a wide range of
pharmaceuticals in India and overseas. The company produces over 190 medications, 60 active
pharmaceutical ingredients (APIs) for drug manufacture, diagnostic kits, critical care,
and biotechnology.

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Dr. Reddy's began as a supplier to Indian drug manufacturers, but it soon started exporting to other
less-regulated markets that had the advantage of not having to spend time and money on
a manufacturing plant that would gain approval from a drug licensing body such as the U.S. Food and
Drug Administration (FDA). By the early 1990s, the expanded scale and profitability from these
unregulated markets enabled the company to begin focusing on getting approval from drug regulators
for their formulations and bulk drug manufacturing plants – in more-developed economies. This
allowed their movement into regulated markets such as the US and Europe.

By 1997, Reddy's made the transition from being an API and bulk drug supplier to regulated markets
like the US and the UK, and a branded formulations supplier in unregulated markets like India and
Russia, into producing generics, by filing an Abbreviated New Drug Application (ANDA) in the USA.
The same year, Reddy's out-licensed a molecule for clinical trials to Novo Nordisk,
a Danish pharmaceutical company.

It strengthened its Indian manufacturing operations by acquiring American Remedies Ltd. in 1999.
This acquisition made Reddy's the third largest pharmaceutical company in India,
after Ranbaxy and Glaxo (I) Ltd., with a full spectrum of pharmaceutical products, which included
bulk drugs, intermediates, finished dosages, chemical synthesis, diagnostics and biotechnology.

Reddy's also started exploiting Para 4 filing as a strategy in bringing new drugs to the market at a
faster pace. In 1999 it submitted a Para 4 application for omeprazole, the drug that had been the
cornerstone of its success in India. In December 2000, Reddy's had undertaken its first commercial
launch of a generic product in the US, and its first product with market exclusivity was launched there
in August 2001. The same year, it also became the first non-Japanese pharmaceutical company from
the Asia-Pacific region to obtain a New York Stock Exchange listing.

In 2001, Reddy's completed its US initial public offering of $132.8 million, secured by American
Depositary Receipts. At that time the company also became listed on the New York Stock Exchange.
Funds raised from the initial public offering helped Reddy's move into international production and
take over technology-based companies.

By 2007, Dr. Reddy's had seven FDA plants producing active pharmaceutical ingredients in India and
seven FDA-inspected and ISO 9001 (quality) and ISO 14001 (environmental management) certified
plants making patient-ready medications – five of them in India and two in the UK.

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History of DR REDDY'S Lab:

Dr Reddy company's first recognized brand in India. Soon, Dr. Reddy's obtained another success with
Moez, its branded omeprazole – gastrointestinal ulcer and reflux esophagitis medication – launched at
half the price of other brands on the Indian market at that time.

Within a year, Reddy's became the first Indian company to export the active ingredients for
pharmaceuticals to Europe. In 1987, Reddy's started to transform itself from a supplier of
pharmaceutical ingredients to other manufacturers into a manufacturer of pharmaceutical products. In
1999, Dr. Reddy's joined the Indian Pharmaceutical Alliance as a founding member in an effort to
promote the development of generic drugs in India.

2.3 DIVIS LAB

Divi's Laboratories Limited is an Indian multinational pharmaceutical company and producer of active
pharmaceutical ingredients (APIs) and intermediates, headquartered in Hyderabad. The company
manufactures and custom synthesizes generic APIs, intermediates. The company also manufactures
and supplies nutraceutical ingredients through its subsidiary, Divi's Nutraceuticals. Divi’s Laboratories
is India's fourth largest publicly listed pharmaceutical company by market capitalization.

Divi's Laboratories custom synthesis division provides contract development and manufacturing
(CDMO) services and contract research and manufacturing services (CRAMS). The company's clients
include 6 of the top 10 largest multinational pharmaceutical companies.

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Divi's Nutraceuticals is a subsidiary of Divi's Laboratories, and manufacturers and supplies over 80
forms of carotenoids and vitamins. Divi's Nutraceuticals was founded in 2006 as a subsidiary of Divi's
Laboratories.

Divi’s has been established for more than 30 years in Hyderabad, India with two manufacturing units
and is among the top pharmaceutical’s companies in India.
Divi’s is recognized as a ‘Reliable Supplier of generic APIs (Active pharmaceuticals ingredients)’ and
a trustworthy ‘Custom Manufacturer’ to Big Pharma and also is among the top API manufactures in
the world.
Divi’s is the leading manufacturer of APIs (Active pharmaceuticals ingredients), Intermediates and
Registered starting materials offering high quality products with the highest level of compliance and
integrity to over 100+ countries.
Divi’s recently reached the milestone of being one among the top 3 API manufacturers in the world
and one among the top API companies in Hyderabad.
~16,500 highly trained professionals across departments and ~400 scientists at Divi’s work together to
bring world class products to customers.
Divi’s is a Public limited company listed on the Indian stock exchange with a revenue of ~$1.2B for
the year 2021-22
Advanced manufacturing facilities both in Hyderabad and Vizag have been inspected multiple times
by USFDA, EU GMP (UK, Slovenia, German, Irish authorities), HEALTH CANADA, TGA,
ANVISA, COFEPRIS, PMDA and MFDS health authorities.

History of DIVIS Lab:

Divi's Laboratories was established in 1990 as Divi's Research Centre. The company initially started
developing commercial processes for the manufacturing of APIs and intermediates. Divi's Research
Centre changed its name to Divi's Laboratories Limited in 1994 to signal its intent to enter the API and
intermediates manufacturing industry. Following this, the company established its first Manufacturing
facility in 1995 at Choutuppal, Telangana. In 2002, the company's second manufacturing facility
commenced operations at Chippada near Visakhapatnam.

The company went public with its initial public offering (IPO) on 17 February 2003. In 2010, the
company established a research centre in Hyderabad.

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2.4 CIPLA:

Cipla Limited (stylized as Cipla) is an Indian multinational pharmaceutical company, headquartered in

Mumbai. Cipla primarily develops medication to treat respiratory disease, cardiovascular
disease, arthritis, diabetes, depression, and other medical conditions.

Cipla has 47 manufacturing locations across the world and sells its products in 86 countries. It is the
third largest drug producer in India.

Cipla sells active pharmaceutical ingredients to other manufacturers as well as pharmaceutical and
personal care products, including the anti-depressant escitalopram oxalate, lamivudine, and fluticasone
propionate. Cipla is the world's largest manufacturer of antiretroviral drugs.

In July 2020, the company announced the introduction of Gilead Sciences' Remdesivir under the brand
name CIPREMI in India after reaching a voluntary licensing agreement with the parent company
and DCGI approval for "restricted emergency use" in COVID-19 treatment of patients in critical
condition.

Cipla has 34 manufacturing units in 8 locations across India and a presence in over 80 countries.
Exports accounted for 48% ₹4,948 crore (equivalent to ₹84 billion or US$1.1 billion in 2023) of its
revenue for the 2013–14 fiscal year. Cipla spent ₹517 crore (5.4% of their revenue) in the 2013–14
fiscal year on R&D activities. The primary focus areas for R&D were development of new
formulations, drug-delivery systems, and APIs. Cipla also cooperates with other enterprises in areas
such as consulting, commissioning, engineering, project appraisal, quality control, know-how transfer,
support, and plant supply.

During the FY 2013–14, the company incurred ₹1,285 crore (equivalent to ₹21 billions.
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History of CIPLA:

Cipla was founded in Mumbai in 1935 by Khwaja Abdul Hamied as the Chemical, Industrial &
Pharmaceutical Laboratories. In July 1984, the name of the company was changed to 'Cipla'. Upon
Hamied's death in 1972, his son Yusuf Hamied, a Cambridge-educated chemist, took over the
company.

In 1995, Cipla launched Deferiprone, the world's first oral iron chelator.

In 1999, Cipla joined the Indian Pharmaceutical Alliance as a founding member in an effort to
promote the development of generic drugs in India. During the AIDS epidemic in the early 2000s,
Hamied reverse-engineered a three-drug antiretroviral medication that was sold for about $12,000 per
year to create a cheaper version that sold for $304 per year.

In 2013 Cipla acquired the South African company Cipla-Medpro. Its name was changed to Cipla
Medpro South Africa Limited and was kept as a subsidiary. At the time of the acquisition, Cipla-
Medpro had been a distribution partner for Cipla and was South Africa's third-biggest pharmaceutical
company. The company had been founded in 2002 under the name Enaleni Pharmaceuticals Ltd. In
2005, Enallene bought all the shares of Cipla-Medpro, which had been a joint venture between Cipla
and Medrol Pharmaceuticals, a South African generics company.

2.5 TORRENT LAB:

Torrent Pharmaceuticals Ltd is an Indian multinational pharmaceutical company, owned by the Rs

37,000 crore Torrent Group and headquartered in Ahmedabad. It was promoted by U. N. Mehta,
initially as Trinity Laboratories Ltd, and was later renamed Torrent Pharmaceuticals Ltd.

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 Torrent Laboratory blends technical prowess with client-centric values—an exceptional
combination. We stand as a beacon of excellence. Our commitment to guiding clients through
regulations while preserving the environment underscores our higher purpose. Opting for Torrent
means choosing to be on the cutting edge of analytical science. As pioneers, we constantly redefine
possibilities, crafting sustainable solutions for an evolving world. A journey with Torrent is a journey
into expert insight, visionary solutions, and a commitment to on-time performance and data quality
and integrity.

In 2018, Torrent Pharmaceuticals recalled tablets containing valsartan and losartan due to the
detection of N-nitroso dimethylamine (NDMA) and N-nitrosodiethylamine (NDEA) respectively
which are probable human carcinogens.

In September 2019, the FDA issued notice of a sixth product recall of losartan by Torrent
Pharmaceuticals when certain batches of losartan contained the contaminant, N-methylnitrosobutyric
acid (NMBA), above acceptable daily intake levels determined by the FDA.

Torrent Laboratory provides a full spectrum of certified laboratory air, soil, & water quality analysis
services dedicated to helping clients meet regulatory requirements and protect the environment in
which people live and work. Our full-service research laboratory provides significant advantages
beyond the 'cookbook chemistry' of traditional labs.

HISTORY OF TORRENT LAB:

Torrent Pharmaceuticals operates in more than 40 countries with over 2000 product
registrations globally. Torrent Pharma is active in the therapeutic areas of Cardiovascular (CV),
central nervous system (CNS), gastro-intestinal, diabetology, anti-infective and pain management
segments. It has also forayed into the therapeutic segments of nephrology and oncology while also
strengthening its focus on gynecology and pediatric segments. Drug firm Torrent Pharmaceuticals on
23 July 2019 reported a 32.51 percent rise in its consolidated net profit to Rs 216 crore for the quarter
ended 30 June, mainly on account of robust sales in most geographies.

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 CHAPTER-3

RESEARCH METHODOLOGY

21
 CHAPTER 3
RESEARCH METHODOLOGY

3.1 STATEMENT OF THE PROBLEM

Measuring return enables financial specialists to survey how well they have done, and it has

an influence in the estimation of future returns. Security examination is worked around the

possibility that financial specialists are worried with two essential properties intrinsic in

securities: the arrival that can be normal from holding a security and the risk on that arrival

that is accomplished will be not as much as the risk that was normal. The basic role of this

paper is to center upon return and exposure and how they are measured. Speculators need to

expand anticipated that profits subjected would their flexibility for risk. Return is the persuade

power and the rule compensate in the speculation procedure and it is the key technique

accessible to speculators in looking at option venture.

3.2 NEED FOR THE STUDY:
• The study of risk and return analysis will guide the investors to segment the portfolio of
securities.

• Match up to diverse investment option in terms of risk and return

• To create inference on the amount of return one should anticipated from an investment
is likely by analyzing historical return exacting stock.

3.3 OBJECTIVES OF THE STUDY:

• To understand the concept of risk and return of a security

• To analyze the risk and return characteristics of selected companies in pharmaceutical
industry
• To compare the risk and return of selected companies
• Measuring risk and return analysis is a vast domain, which requires new techniques and
continuous research to reduce, and hedge risk, so there is always scope to calculate risk and
return for an investment.
•

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3.4 SCOPE OF THE STUDY:
Securities market in India is growing in a rapid phase, and returns to the investors has also

been increases. Even higher returns than expected. But suddenly as the original nature of

Indian stock market there are peak variations this means market is highly open to risk of

speculators, insider information but hard-earned money of investors is at risk so the scope of

risk and return analysis is required

3.5 RESEARCH METHODOLGY:

Collected the past stock price information from 5 Years of stock price collected according to

every month average of 2018 and 2023 from January to December

1. Return

2. Risk

Technique for collection of data

• Secondary Data

Data required for the study is collected through the material published by the Stock Exchange

of Mumbai and National Stock Exchange. The supplemented information gathered from

websites of companies

3.6 LIMITATIONS OF THE STUDY:

 The area of study is limited to only pharmaceutical sector.

 Risk cannot be calculated precisely as market conditions is always variable and doubtful

 Secondary data is mostly used for the study

3.7 SAMPLE OF THE STUDY:

The following companies are used for the analysis of risk and return

Sl.no NAME TYPE INDUSTRY

Pharma
1 SUN PHARMA Public
Pharma
2 DR REDDYS LABS Public
DIVIS LABS Public Pharma
3

23
 CIPLA
4 Public Pharma
TORRENT PHARMA Pharma
5 Public

CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

24
 Date Close Return RISK
01-12-2017 552.9
01-01-2018 579.9 4.88 8.31
01-02-2018 535.35 -7.68 8.30
01-03-2018 495.1 -7.52 8.29
CHAPTER 4 01-04-2018 528.4 6.73 8.28
01-05-2018 480.35 -9.09 8.31
DATA ANALYSIS 01-06-2018 564 17.41 8.28 AND
INTERPRETATION 01-07-2018 568.5 0.80 8.10
01-08-2018 652.85 14.84 8.16
4.1 SUN PHARMA 01-09-2018 623.25 -4.53 8.05
01-10-2018 580.25 -6.90 8.08
01-11-2018 492.6 -15.11 8.08
NAME 01-12-2018 TYPE -12.61
430.5 7.86 INDUSTRY
Sun Pharma 01-01-2019 423.45
Public -1.64 7.70 Pharma
01-02-2019 445.15 5.12 7.75
4.1 A Table shows 01-03-2019 478.85 7.57 7.81 Return and Risk
Analysis of Sun pharma 01-04-2019 457.65 -4.43 7.84 from the year 2018 to
2023 01-05-2019 409.85 -10.44 7.87
01-06-2019 400.95 -2.17 7.75
01-07-2019 426.75 6.43 7.80
A 01-08-2019 450.4 5.54 7.86
01-09-2019 Return
389.45 -13.53 7.92
01-10-2019 433.4 11.29 7.68
40.00
01-11-2019 449.85 3.80 7.65
01-12-2019 432.55 -3.85 7.73
30.00
01-01-2020 434.3 0.40 7.76
01-02-2020 372.9 -14.14 7.84
20.00
01-03-2020 352.3 -5.52 7.53
01-04-2020 464.45 31.83 7.51
10.00 01-05-2020 474.25 2.11 6.14
01-06-2020 472.95 -0.27 6.22
0.00 01-07-2020 531.7 12.42 6.28
17 18 18 18 18 19 19 19 19 20 20 20 20 21 21 21 21 22 22 22 22 23 23 23
20 20 20 20 20 201-08-2020
0 20 20 20 20 520.2520 20 20 -2.15
20 20 20 26.150 20 20 20 20 20 20 20
/ 1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/
2
-10.00
1 3 6 9 12 3 01-09-2020
6 9 12 3 6500.45
9 12 3 -3.81
6 9 1 2 6.19
3 6 9 12 3 6 9
01-10-2020 465.75 -6.93 6.19
-20.00 01-11-2020 511.65 9.86 6.08
01-12-2020 592.35 15.77 6.04
Return Linear (Return)
01-01-2021 586.2 -1.04 5.68
Graph representing 01-02-2021 594.6 1.43 5.74 about Return of sun
pharma from the year 01-03-2021 597.8 0.54 5.82 2018 to 2023
01-04-2021 654.45 9.48 5.91
01-05-2021 668.3 2.12 5.85
01-06-2021 675.45 1.07 5.94
01-07-2021 773.95 14.58 6.04
01-08-2021 794.05 2.60 5.65
01-09-2021 818.25 3.05 5.74
01-10-2021 795 -2.84 5.84
01-11-2021 753.6 -5.21 5.90
01-12-2021 845.7 12.22 5.86
01-01-2022 834.5 -1.32 5.55
01-02-2022 843.9 1.13 5.65
01-03-2022 914.75 8.40 5.78
01-04-2022 928.65 1.52 5.71
01-05-2022 860.6 -7.33 5.85
01-06-2022 830.625 -3.49 5.66
01-07-2022 943.2 13.56 5.69
01-08-2022 893.05 -5.32 5.02
01-09-2022 948.65 6.23 4.90
INTERPRETATION:

Sun Pharma's annual returns have shown variability, with 2018 marked by negative trends, including a
low of -15.11% in November, resulting in an average return of -3.23%. The following year, 2019, saw
occasional positive returns, averaging 1.23%. In 2020, there were ups and downs, notably a significant
drop in February and a substantial 15.77% gain in December, averaging at 1.38%. 2021 demonstrated
resilience with positive returns, achieving a 12.22% return by December and an average of 4.14%. The
year 2022 fluctuated, resulting in an average of 2.09%. Up to October 2023, positive returns
dominated, contributing to an average of 2.61%. Overall, the average annual return for the entire
period (2018-2023) is 1.31%, reflecting mixed performance and volatility that investors should
consider in their assessments of Sun Pharma's historical

26
 A Graph representing about Risk of sun pharma from the year 2018 to 2023

RISK
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
17 18 18 18 18 19 19 19 19 20 20 20 20 21 21 21 21 22 22 22 22 23 23 23
/ 20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
/1 /1 6/1 9/1 2/1 3/1 6/1 9/1 2/1 3/1 6/1 9/1 2/1 3/1 6/1 9/1 2/1 3/1 6/1 9/1 2/1 3/1 6/1 9/1
12 3 1 1 1 1 1

RISK Linear (RISK)

INTERPRETATION:

From the above graph it can be interpreted that Sun Pharma's risk profile has displayed fluctuations
over the years, notably in 2018 and 2019, marked by high volatility with significant positive and
negative returns. The impact of the COVID-19 pandemic in 2020 contributed to a sharp decline in
early months, followed by a recovery with substantial positive returns. In 2021, the risk decreased, and
the company demonstrated a more stable performance. Throughout 2022 and 2023, Sun Pharma
maintained a moderate risk level with a mix of positive and negative returns. The average risk over the
entire period stands at 1.31%, signaling a relatively stable performance. Investors should remain
vigilant, considering the company's financial health and industry trends to navigate potential risks
effectively

27
 Date Close Return RISK
01-12-2017 2428.15
01-01-2018 2225.35 -8.35 7.60
01-02-2018 2237.25 0.53 7.51
01-03-2018 2080.55 -7.00 7.57
NAME 01-04-2018 2109.85TYPE 1.41 7.55 INDUSTRY
01-05-2018 1936.6 -8.21 7.60
Dr Reddy’ s Labs01-06-2018 2235.05 Public 15.41 7.56 Pharma
01-07-2018 2127.8 -4.80 7.43
4.2 DR REDDY’S 01-08-2018 2492 17.12 7.44 LAB
01-09-2018 2530.65 1.55 7.24
01-10-2018 2542.45 0.47 7.30
4.2 A Table Shows 01-11-2018 2722.2 7.07 7.36 Return and Risk
Analysis of Dr 01-12-2018 2616.5 -3.88 7.39 Reddy’s lab from
the year 2018 to 01-01-2019 2720.8 3.99 7.42
2023
01-02-2019 2631.65 -3.28 7.47
01-03-2019 2780.25 5.65 7.51
01-04-2019 2933.75 5.52 7.56
01-05-2019 2678.35 -8.71 7.61
01-06-2019 2550.45 -4.78 7.55
01-07-2019 2574.6 0.95 7.57
01-08-2019 2557.5 -0.66 7.64
01-09-2019 2702.25 5.66 7.71
01-10-2019 2783.2 3.00 7.76
01-11-2019 2913.85 4.69 7.84
01-12-2019 2874.55 -1.35 7.91
01-01-2020 3114.5 8.35 7.98
01-02-2020 2927.1 -6.02 8.01
01-03-2020 3120.75 6.62 8.01
01-04-2020 3936.3 26.13 8.07
01-05-2020 4071.25 3.43 7.23
01-06-2020 3944.95 -3.10 7.31
01-07-2020 4521.05 14.60 7.37
01-08-2020 4264.7 -5.67 7.14
01-09-2020 5187.8 21.65 7.15
01-10-2020 4888.65 -5.77 6.39
01-11-2020 4828.95 -1.22 6.40
01-12-2020 5205.1 7.79 6.48
01-01-2021 4602.7 -11.57 6.46
01-02-2021 4426.55 -3.83 6.21
01-03-2021 4516 2.02 6.26
01-04-2021 5163.1 14.33 6.35
01-05-2021 5309.15 2.83 5.96
01-06-2021 5423.05 2.15 6.04
01-07-2021 4711.2 -13.13 6.13
01-08-2021 4704.05 -0.15 5.69
01-09-2021 4880.7 3.76 5.79
01-10-2021 4659.2 -4.54 5.87
01-11-2021 4675.85 0.36 5.90
01-12-2021 4907 4.94 6.02
01-01-2022 4302.8 -12.31 6.08
01-02-2022 4063.4 -5.56 5.54
01-03-2022 4295.45 5.71 5.47
01-04-2022 4131.95 -3.81 5.52
01-05-2022 4369.65 5.75 5.53
01-06-2022 4393.8 28 0.55 5.59
01-07-2022 4090.35 -6.91 5.75
01-08-2022 4245.05 3.78 5.53
01-09-2022 4335.7 2.14 5.69
A Graph representing about Return of Dr Reddy’s lab from the year 2018 to 2023

Return
30.00

25.00

20.00

15.00

10.00

5.00

0.00
17 18 18 18 18 19 19 19 19 20 20 20 20 21 21 21 21 22 22 22 22 23 23 23
-5.00
/ 20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
/1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1
12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9
-10.00

-15.00

-20.00

Return Linear (Return)

INTERPRETATION:

From the above graph Dr. Reddy's Laboratories demonstrated varying returns over the years,
reflecting market fluctuations in the pharmaceutical sector. In 2018, the company experienced a
downturn early in the year but rebounded with positive returns by year-end. Subsequent years saw a
mix of positive and negative returns, showcasing the inherent volatility in the industry. The impact of
the COVID-19 pandemic in 2020 led to a sharp decline in March, followed by a significant recovery.
Although 2021 witnessed a dip in returns initially, the company recovered with positive returns in
subsequent months. In 2022, returns remained relatively stable, with occasional fluctuations.
However, 2023 presented challenges with negative returns in May, followed by a rebound in June.
The average return over the entire period stands at 1.42%, indicating a moderate level of volatility.
Investors should stay vigilant regarding industry trends, regulatory changes, and the company's
strategic initiatives for informed decision-making

29
A Graph representing about Risk of Dr Reddy’s lab from the year 2018 to 2023

RISK
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
7 8 8 8 8 9 9 9 9 0 0 0 0 1 1 1 1 2 2 2 2 3 3 3
01 01 01 01 01 01 01 01 01 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02
1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2
/ / / / / / / / / / / / / / / / / / / / / / / /
12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

RISK Linear (RISK)

INTERPRETATION:

In the above graph Dr. Reddy's Laboratories displayed varying levels of risk over the analyzed period,
reflecting the dynamic nature of the pharmaceutical industry. In 2018, the company navigated through
a volatile market with fluctuations in risk, marked by negative returns in the first quarter but a
subsequent positive turnaround by year-end. Subsequent years witnessed a mix of risk levels, aligning
with market conditions and industry factors. The COVID-19 impact in 2020 led to heightened risk,
particularly in March, followed by a recovery. Throughout 2021 and 2022, the company maintained a
moderate level of risk, with occasional fluctuations. However, in 2023, there was a notable increase in
risk in May, followed by a decline in June. The average risk over the entire period is 6.60%, reflecting
a moderate overall risk profile. Investors should closely monitor industry dynamics, regulatory
changes, and the company's strategic decisions to gauge and manage potential risks effectively.

30
4.3 DIVIS LAB

NAME TYPE INDUSTRY

Divis Labs Public Pharma

4.3 A Table Shows Return and Risk Analysis of Divis lab from the year 2018 to 2023

31
 Date Close Return RISK
01-12-2017 882.5
01-01-2018 1039.4 17.78 7.96
01-02-2018 1025.9 -1.30 7.73
01-03-2018 1090.2 6.27 7.78
01-04-2018 1197.5 9.84 7.82
01-05-2018 1047.45 -12.53 7.82
01-06-2018 1038.6 -0.84 7.67
01-07-2018 1149.45 10.67 7.72
01-08-2018 1305.9 13.61 7.71
01-09-2018 1310.9 0.38 7.63
01-10-2018 1484.5 13.24 7.69
01-11-2018 1439.35 -3.04 7.61
01-12-2018 1482.65 3.01 7.65
01-01-2019 1506.2 1.59 7.71
01-02-2019 1654.25 9.83 7.78
01-03-2019 1703.1 2.95 7.77
01-04-2019 1746.85 2.57 7.84
01-05-2019 1592.3 -8.85 7.91
01-06-2019 1596.95 0.29 7.85
01-07-2019 1633.75 2.30 7.92
01-08-2019 1625.4 -0.51 8.00
01-09-2019 1665.5 2.47 8.07
01-10-2019 1755.05 5.38 8.15
01-11-2019 1786.2 1.77 8.21
01-12-2019 1845.8 3.34 8.30
01-01-2020 1952.3 5.77 8.38
01-02-2020 2106.95 7.92 8.45
01-03-2020 1989.05 -5.60 8.49
01-04-2020 2332.9 17.29 8.52
01-05-2020 2390.1 2.45 8.28
01-06-2020 2278.9 -4.65 8.37
01-07-2020 2616.55 14.82 8.42
01-08-2020 3122.8 19.35 8.25
01-09-2020 3047.95 -2.40 7.81
01-10-2020 3142.05 3.09 7.90
01-11-2020 3605.1 14.74 7.99
01-12-2020 3841.9 6.57 7.74
01-01-2021 3369.85 -12.29 7.78
01-02-2021 3363.1 -0.20 7.59
01-03-2021 3622.8 7.72 7.71
01-04-2021 4062.35 12.13 7.72
01-05-2021 4194 3.24 7.53
01-06-2021 4408.25 5.11 7.63
01-07-2021 4906.1 11.29 7.69
01-08-2021 5173.6 5.45 7.49
01-09-2021 4798.7 -7.25 7.52
01-10-2021 5150.15 7.32 7.57
01-11-2021 4878.8 -5.27 7.53
01-12-2021 4678.2 -4.11 7.64
01-01-2022 4036.1 -13.73 7.78
01-02-2022 4265 5.67 7.45
01-03-2022 4402.05 3.21 7.51
01-04-2022 4505.4 2.35 7.64
01-05-2022 3591.3 -20.29 7.80
01-06-2022 32
3630.4 1.09 6.52
01-07-2022 3831.65 5.54 6.71
01-08-2022 3626.85 -5.34 6.76
01-09-2022 3705.2 2.16 6.86
A Graph representing about Return of Divis lab from the year 2018 to 2023

Return
25.00
20.00
15.00
10.00
5.00
0.00
17 18 18 18 18 19 19 19 19 20 20 20 20 21 21 21 21 22 22 22 22 23 23 23
-5.00
/ 20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
/1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1
12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9
-10.00
-15.00
-20.00
-25.00

Return Linear (Return)

INTERPRETATION:

Divi's Laboratories exhibited varying returns over the analyzed period. In 2018, the company
experienced a robust start with a significant 17.78% return in January, but subsequent months saw
fluctuations, including a dip in May. The year ended on a positive note with a 3.01% gain in
December. The following years showed a mix of positive and negative returns, influenced by market
conditions. Notably, the impact of the COVID-19 pandemic in 2020 led to a dip in returns in March,
followed by a substantial recovery and positive returns in the subsequent months. The trend continued
in 2021, with occasional fluctuations, while 2022 and early 2023 witnessed volatility and negative
returns in certain months. The average return over the entire period stands at 2.26%, reflecting a
moderate level of performance volatility. Investors should consider monitoring market dynamics and
industry trends for informed decision-making regarding Divi's Laboratories.

33
A Graph representing about Risk of Divis lab from the year 2018 to 2023

RISK
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
7 8 8 8 8 9 9 9 9 0 0 0 0 1 1 1 1 2 2 2 2 3 3 3
01 01 01 01 01 01 01 01 01 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02
1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2
/ / / / / / / / / / / / / / / / / / / / / / / /
12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

RISK Linear (RISK)

INTERPRETATION:

Divis Laboratories' year-wise risk assessment reflects the company's response to evolving market
conditions. In 2018, the stock exhibited moderate risk, with fluctuations in monthly returns indicating
market sensitivity. The subsequent year, 2019, showed a more balanced risk profile, characterized by
consistent positive returns and manageable volatility. The year 2020 witnessed increased risk,
particularly in March amid global uncertainties, but Divis Laboratories demonstrated resilience with a
substantial 17.29% return in April. In 2021, heightened risk was evident, marked by a -12.29% return
in January, signaling susceptibility to market downturns. The year 2022 experienced a significant risk
spike in May with a -20.29% return, possibly influenced by broader economic factors. Despite
challenges, the company showcased adaptability in subsequent months. The risk profile in 2023
appears moderate, reflecting Divis Labs' ability to manage varying market conditions. This dynamic
risk landscape underscores the importance of continuous risk assessment and strategic planning in
navigating the pharmaceutical industry and financial markets.

34
 Date Close Return RISK
01-12-2017 627.6
01-01-2018 592.15 -5.65 8.24
01-02-2018 589.65 -0.42 8.20
01-03-2018 545.45 -7.50 8.26
01-04-2018 607.4 11.36 8.25
01-05-2018 524.8 -13.60 8.22
01-06-2018 616.65 17.50 8.07
01-07-2018 641.35 4.01 7.89
01-08-2018 662.15 3.24 7.94
01-09-2018 654.05 -1.22 8.00
4.4 CIPLA 01-10-2018 629.25 -3.79 8.06
01-11-2018 540.85 -14.05 8.10
NAME 01-12-2018 TYPE
519.5 -3.95 7.91 INDUSTRY
Cipla 01-01-2019 Public
517.3 -0.42 7.94 Pharma
01-02-2019 554.55 7.20 8.01
4.4 A Table Shows 01-03-2019 528.9 -4.63 8.04 Return and Risk
Analysis of Cipla from 01-04-2019 565 6.83 8.07 the year 2018 to 2023
01-05-2019 558.85 -1.09 8.12
01-06-2019 553.45 -0.97 8.18
01-07-2019 521.1 -5.85 8.25
01-08-2019 472.45 -9.34 8.26
01-09-2019 425.5 -9.94 8.19
01-10-2019 466.85 9.72 8.08
01-11-2019 466.7 -0.03 8.10
01-12-2019 478.2 2.46 8.18
01-01-2020 446.9 -6.55 8.26
01-02-2020 402.1 -10.02 8.25
01-03-2020 422.85 5.16 8.12
01-04-2020 589.6 39.43 8.20
01-05-2020 648.15 9.93 6.07
01-06-2020 640.25 -1.22 6.01
01-07-2020 720.15 12.48 6.06
01-08-2020 713.55 -0.92 5.90
01-09-2020 774.7 8.57 5.96
01-10-2020 754.5 -2.61 5.92
01-11-2020 745.6 -1.18 5.97
01-12-2020 819.95 9.97 6.03
01-01-2021 825.9 0.73 5.95
01-02-2021 787.05 -4.70 6.03
01-03-2021 815.1 3.56 6.03
01-04-2021 910.35 11.69 6.11
01-05-2021 949.35 4.28 5.92
01-06-2021 971.9 2.38 5.99
01-07-2021 920.05 -5.33 6.09
01-08-2021 947.8 3.02 6.08
01-09-2021 983.55 3.77 6.18
01-10-2021 905.05 -7.98 6.27
01-11-2021 971.3 7.32 6.13
01-12-2021 944.1 -2.80 6.13
01-01-2022 945 0.10 6.20
01-02-2022 925.05 -2.11 6.34
01-03-2022 1018.05 10.05 6.44
01-04-2022 981.2 -3.62 6.30
01-05-2022 992.95 1.20 6.37
01-06-2022 917.235 -7.63 6.55
01-07-2022 977.4 6.56 6.35
01-08-2022 1038.45 6.25 6.44
01-09-2022 1114.95 7.37 6.53
A Graph representing about Return of Cipla from the year 2018 to 202

Return
50.00

40.00

30.00

20.00

10.00

0.00
17 18 18 18 18 19 19 19 19 20 20 20 20 21 21 21 21 22 22 22 22 23 23 23
/ 20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
/1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1
-10.00
12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

-20.00

Return Linear (Return)

INTERPRETATION:

Cipla's year-wise return analysis reflects a dynamic performance over the examined period. In 2018,
the stock experienced a challenging start with a -5.65% return in January, setting the tone for a
fluctuating year. The subsequent months displayed varying returns, ultimately resulting in an annual
return of -3.95%. The year 2019 witnessed a mix of positive and negative returns, with notable peaks
in February and April, contributing to an overall annual return of 2.46%. However, 2020 marked a
more challenging period, with substantial declines in March and February, resulting in a notable -
10.02% return. The pharmaceutical company exhibited resilience in subsequent months, reflected in a
remarkable 39.43% return in April, contributing to an annual return of 9.93%. In 2021, the stock
demonstrated stability with a modest 0.73% return in January and positive returns in subsequent
months, culminating in an annual return of 3.56

36
A Graph representing about Risk of Cipla from the year 2018 to 2023

RISK
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
17 18 18 18 18 19 19 19 19 20 20 20 20 21 21 21 21 22 22 22 22 23 23 23
/ 20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
/1 3/1 6/1 9/1 2/1 3/1 6/1 9/1 2/1 3/1 6/1 9/1 2/1 3/1 6/1 9/1 2/1 3/1 6/1 9/1 2/1 3/1 6/1 9/1
12 1 1 1 1 1

RISK
INTERPRETAION:

Cipla's year-wise risk analysis reveals the company's responsiveness to market dynamics. In 2018, the
stock experienced volatility, with a notable -13.60% return in May contributing to an overall annual
risk of 8.10%. The subsequent year demonstrated a mixed risk profile, characterized by fluctuations in
monthly returns and culminating in an annual risk of 7.94%. The year 2020 witnessed heightened risk
in February and March, as reflected in a -10.02% return, likely influenced by uncertainties
surrounding the global pandemic. However, Cipla showcased resilience with a substantial 39.43%
return in April, contributing to an annual risk of 6.07%. In 2021, the stock demonstrated relative
stability, with an annual risk of 5.95%, despite minor fluctuations in monthly returns. The following
year saw a mix of positive and negative returns, resulting in an annual risk of 6.34% in 2022. In

37
 Date Close Return RISK
01-12-2017 634.925
01-01-2018 681.475 7.33 6.80
01-02-2018 684.625 0.46 6.77
01-03-2018 623.95 -8.86 6.82
4.5 TORRENT 01-04-2018 707.725 13.43 6.74 PHARMA
01-05-2018 705.125 -0.37 6.64
NAME 01-06-2018
TYPE -0.55
701.25 6.69
INDUSTRY
Torrent Pharma Public Pharma
01-07-2018 763.1 8.82 6.73
01-08-2018 906.525 18.80 6.73
4.5 A Table Shows Return and Risk
Analysis of Torrent 01-09-2018 825.125 -8.98 6.43 Pharma from the year
2018 to 2023 01-10-2018 832.625 0.91 6.34
01-11-2018 884.375 6.22 6.39
01-12-2018 885.625 0.14 6.41
01-01-2019 908.55 2.59 6.47
01-02-2019 902.825 -0.63 6.52
01-03-2019 976.1 8.12 6.57
01-04-2019 896.075 -8.20 6.57
01-05-2019 781.425 -12.79 6.50
01-06-2019 774.4 -0.90 6.25
01-07-2019 834.625 7.78 6.30
01-08-2019 853.775 2.29 6.30
01-09-2019 833.2 -2.41 6.37
01-10-2019 887.5 6.52 6.40
01-11-2019 948.45 6.87 6.43
01-12-2019 923.475 -2.63 6.46
01-01-2020 965.175 4.52 6.49
01-02-2020 1074.55 11.33 6.55
01-03-2020 985.75 -8.26 6.47
01-04-2020 1172.25 18.92 6.36
01-05-2020 1182.4 0.87 5.87
01-06-2020 1185.45 0.26 5.94
01-07-2020 1331.35 12.31 6.01
01-08-2020 1330.5 -0.06 5.83
01-09-2020 1400.1 5.23 5.90
01-10-2020 1282.35 -8.41 5.94
01-11-2020 1305.55 1.81 5.81
01-12-2020 1400.35 7.26 5.89
01-01-2021 1302 -7.02 5.88
01-02-2021 1214.775 -6.70 5.80
01-03-2021 1270.6 4.60 5.71
01-04-2021 1254.85 -1.24 5.77
01-05-2021 1370 9.18 5.84
01-06-2021 1451.325 5.94 5.77
01-07-2021 1534.85 5.76 5.81
01-08-2021 1552.2 1.13 5.84
01-09-2021 1538.4 -0.89 5.95
01-10-2021 1430.125 -7.04 6.05
01-11-2021 1521.675 6.40 5.94
01-12-2021 1639.575 7.75 5.98
01-01-2022 1335.8 -18.53 5.95
01-02-2022 1378.45 3.19 4.35
01-03-2022 1398.15 1.43 4.44
01-04-2022 1403.925 0.41 4.55
01-05-2022 1424.6 1.47 4.66
01-06-2022 38
1429.7 0.36 4.78
01-07-2022 1528.8 6.93 4.91
01-08-2022 1552.4 1.54 4.90
01-09-2022 1558.65 0.40 5.06
A Graph representing about Return of Torrent Pharma from the year 2018 to 2023

Return
25.00

20.00

15.00

10.00

5.00

0.00
17 18 18 18 18 19 19 19 19 20 20 20 20 21 21 21 21 22 22 22 22 23 23 23
-5.00
/ 20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
/1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1
12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9
-10.00

-15.00

-20.00

-25.00

Return Linear (Return)

INTERPRETATION:

Torrent Pharma's year-wise return analysis highlights the stock's dynamic performance across the
examined period. In 2018, the stock exhibited positive returns, notably achieving a 7.33% increase in
January, setting a positive tone for the year with an overall annual return of 18.80%. The subsequent
year, 2019, showcased a mix of positive and negative returns, with notable peaks in March and April,
contributing to an annual return of 2.59%. The year 2020 saw volatility, marked by an 18.92% return
in April amidst the global pandemic, resulting in an annual return of 11.33%. Despite challenges,
Torrent Pharma demonstrated stability in 2021 with an annual return of 4.60%, and further positive
returns were observed in subsequent years, including 2023, where the stock recorded an 11.59%
increase in May. The average annual return over the period stands at 1.83%, underlining the
company's ability to navigate market fluctuations in the pharmaceutical sector.

39
A Graph representing about Return of Torrent Pharma from the year 2018 to 2023

RISK
8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00
7 8 8 8 8 9 9 9 9 0 0 0 0 1 1 1 1 2 2 2 2 3 3 3
01 01 01 01 01 01 01 01 01 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02
1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2
/ 3/ 6/ 9/ 2/ 3/ 6/ 9/ 2/ 3/ 6/ 9/ 2/ 3/ 6/ 9/ 2/ 3/ 6/ 9/ 2/ 3/ 6/ 9/
12 1 1 1 1 1

RISK
INTERPRETATION:

Among the pharmaceutical companies analyzed, Divis Laboratories stands out with the highest
average annual return of 2.26%, showcasing a consistent positive performance over the given period.
Dr. Reddy's Laboratories and Sun Pharma also demonstrate respectable returns of 1.42% and 1.31%,
respectively. Cipla and Torrent Pharma present moderate returns of 1.25% and 1.83%, respectively. In
terms of risk, Torrent Pharma has the lowest average annual risk at 5.73%, suggesting a relatively
stable performance. Sun Pharma and Dr. Reddy's Labs have similar risk levels, with 6.47% and
6.60%, respectively. Cipla follows closely with a risk of 6.84%, while Divis Labs exhibits the highest
risk at 7.54%. Investors may consider these factors, balancing returns and risks, to make informed
decisions based on their risk tolerance and investment goals in the pharmaceutical sector

40
4.6 Return And Risk Analysis of 5 Pharma companies in India from the year 2018 to2023

NAME OF THE COMPANY RETURN RISK

SUN PHARMA 1.31 6.47

DR REDDYS LABS 1.42 6.60

DIVIS LABS 2.26 7.54

CIPLA 1.25 6.84

TORRENT PHARMA 1.83 5.73

8 7.54

7 6.84
6.47 6.6

6 5.73

3
2.26
2 1.83
1.31 1.42 1.25
1

0
SUN PHARMA DR REDDYS LABS DIVIS LABS CIPLA TORRENT PHARMA

RETURN RISK

INTERPRETATION:

Among the pharmaceutical companies analyzed, Divis Laboratories stands out with the highest average annual
return of 2.26%, showcasing a consistent positive performance over the given period. Dr. Reddy's Laboratories
and Sun Pharma also demonstrate respectable returns of 1.42% and 1.31%, respectively. Cipla and Torrent
Pharma present moderate returns of 1.25% and 1.83%, respectively. In terms of risk, Torrent Pharma has the

41
lowest average annual risk at 5.73%, suggesting a relatively stable performance. Sun Pharma and Dr. Reddy's
Labs have similar risk levels, with 6.47% and 6.60%, respectively. Cipla follows closely with a risk of 6.84%,
while Divis Labs exhibits the highest risk at 7.54%. Investors may consider these factors, balancing returns and
risks, to make informed decisions based on their risk tolerance and investment goals in the
pharmaceutical sector

CHAPTER-5

FINDINGS, SUGGESTIONS AND CONCLUSION

42
 CHAPTER-5
FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 FINDINGS
Divis Laboratories Outperforms:
Divis Laboratories stands out as the top performer among the analyzed pharmaceutical companies,
boasting the highest average annual return of 2.26%. This indicates consistent positive performance
over the examined period.

Risk-Return Balance:
Torrent Pharma emerges as a company with a relatively balanced risk-return profile, featuring the
highest average return of 1.83% coupled with the lowest average annual risk at 5.73%. This suggests
that Torrent Pharma achieved a notable return with comparatively lower risk.

Moderate Returns, Moderate Risks:

Sun Pharma, Dr. Reddy's Laboratories, and Cipla present moderate returns ranging from 1.25% to
1.42%, accompanied by risk levels in the mid-range, varying from 6.47% to 6.84%. These companies
may appeal to investors seeking a balanced approach between returns and risks.

Risk Variability:
Divis Laboratories, while offering the highest returns, also exhibits the highest average annual risk at
7.54%. Investors interested in Divis Labs may need to consider a higher risk tolerance.

Diverse Investment Considerations:

Each pharmaceutical company in the analysis has its unique risk and return profile. Investors should
carefully weigh their investment goals, risk tolerance, and market outlook before making decisions.
These findings provide insights into the performance and risk characteristics of the pharmaceutical
companies, aiding investors in making informed choices aligned with their financial objectives and
risk preferences

5.2 SUGGESTIONS

The present study shows that the Top companies or selected sectors are down on performance at

the market. The investor has to study the price behavior of the stocks. Usually, history Repeat

itself even though it is not imperfect always. Pharma shares in the portfolio of the investor is

43
likely to give good returns but with high-risk percentage. Suggesting a continuous growth over a

period of time might not suit Pharma sector.

Compared between these above stocks provides more returns with constant growth with less due
to market imbalance Pharma shares in the portfolio of the investor is likely to give good returns but
with high-risk percentage. Suggesting a continuous growth over a period of time might not suit
Pharma sector.

5.3 CONCLUSION

Risk and return analysis are very essential, because it helps to calculate future predictable returns and

risk of the stock. From the study it is clear that the investment in SUN PHARMA, CIPLA and

TORRENT has low risk with decent returns. CIPLA Bank and DR REDDYS LAB with moderate

risk and a moderate return. While stocks In SUN PHARMA have high risk and comparatively with

others. due some organizational problems at the time of demonetization in India it incurs some loss.

So, it may fail to reach the expected rate of return for the year 2018 and 2022 The Sun Pharma is the

stock that has found good recovery in terms of reducing risk from year to year and also fetching

higher returns compared to other stocks considered in the study.

The investment in stocks of in Nifty index with preferable because of continuous appreciation of

nifty index. Investments in stocks are to be made for a longer period of time to fetch good returns

for what an investor has invested

44
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