A Study on Risk Adjusted Returns Analysis at Kotak Mahindra Bank

Abstract

Risk-adjusted return analysis constitutes a fundamental pillar of modern portfolio theory, enabling investors and financial institutions to evaluate investment performance relative to the inherent risk assumed. Kotak Mahindra Bank, one of India's pre-eminent private sector banks with a diversified financial services portfolio spanning banking, asset management, insurance, and securities, presents an enriched subject for such analysis given its multi-segment business model and sustained outperformance relative to sector benchmarks. This study examines the riskadjusted return profile of Kotak Mahindra Bank over a five-year period (FY 2019–20 to FY 2023–24), employing classical and contemporary risk-measurement tools including the Sharpe Ratio, Treynor Ratio, Jensen's Alpha, Standard Deviation, Beta Coefficient, and the Coefficient of Variation. Secondary financial data were sourced from Kotak Mahindra Bank annual reports, BSE/NSE historical price data, SEBI disclosures, and published research. Results reveal that the bank consistently generated positive risk-adjusted returns across the study period, with Sharpe Ratios exceeding the banking sector benchmark in four of five years. Jensen's Alpha indicates persistent positive abnormal returns, suggesting skilled portfolio and treasury management. Beta values below unity confirm lower systematic risk relative to the NIFTY 50, making the stock attractive to risk-averse institutional investors. The study provides actionable insights for investors, fund managers, and bank strategists.