“RISK AND RETURN ANALYSIS WITH REFERENCE TO THREE

SELECTIVE BANK NIFTY STOCKS”

A PROJECT REPORT
Submitted to the

DR.M.G.R. EDUCATIONAL AND RESEARCH INSTITUTE UNIVERSITY

In partial fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

By
MOHAMED ASLAM.M K
(REGISTER No: 215052101054)
Under the guidance of

DR S KOLANJIAPPAN
ASSOCIATE PROFESSOR

DEPARTMENT OF MANAGEMENT STUDIES

DR.M G R EDUCATIONAL AND RESEARCH INSTITUTE
MADURAVOYAL-600095
CHENNAI DIST
JULY-2022
 DECLARATION

I, MOHAMED ASLAM M K hereby declare that the project work entitled “RISK AND RETURN
ANALYSIS WITH REFERENCE TO THREE SELECTIVE BANK NIFTY STOCKS” submitted to
the Dr. M G R Educational And Research Institute in partial fulfilment of the requirement for the
award of the degree of MASTER OF BUSINESS ADMINISTRATION is a record of original research
carried out by me under the guidance of DR S KOLANJIAPPAN Associate Professor, Department
of Management studies, Dr. M G R Educational And Research Institute, Maduravoyal.

Place: CHENNAI Signature of the candidate

Date: (MOHAMED ASLAM M K)
 ACKNOWLEDGEMENT

I thank the almighty for installing in me the strength and power required to fulfil the work extended to
me. With immense pleasure I express my heartfelt gratitude to the management and staffs of DR.M G R
EDUCATIONAL AND RESEARCH INSTITUTE UNVERSITY, for their valuable guidance
extended to me for the successful accomplishment of this organizational study. I articulate the feeling of
obligation for the splendid support extended by DR KOLANJIAPPAN, Asst. Professor, my academic
guide without whose meticulous and industrial guidance, this study would have not served its very
purpose. I would like to express my sincere thanks and heartfelt to my organization guide A.S KUMAR,
FCA Manager and all the staff in KOTAK SECURITIES LTD for their motivation, support and
guidance throughout the preparation of this project.
 TABLE OF CONTENT

CHAPTER TITLE PAGE

NO
1 CHAPTER 1-INTRODUCTION

1.1 INTRODUCTION 1
1.2 INDUSTRY PROFILE 5
1.3 COMPANY PROFILE 10
1.4 PRODUCT PROFILE 11
1.5 NEED FOR THE STUDY 16
1.6 OBJECTIVE OF THE STUDY 17
1.7 SCOPE OF THE STUDY 17
1.8 LIMITATIONS OF THE STUDY 18
2 CHAPTER 2-LITERATURE REVIEW

2.1 LITERATURE REVIEW 19

2.2 STUDY ON COMPARISON OF RISK-RETURN ANALYSIS OF 20
PUBLIC AND PRIVATE SECTOR BANKS LISTED ON NIFTY
BANK
2.3 RISK AND RETURN WITH REFERENCE TO SELECTED 21
STOCKS OF NIFTY BANK
3 CHAPTER 3-RESEARCH METHODOLOGY

3.1 RESEARCH METHODOLOGY 25

3.2 RESEARCH DESGIN 26
4 CHAPTER 4-DATA ANALYSIS AND INTERPRETATION

4.1 DATA ANALYSIS AND INTERPRETATION 27

4.2 SWOT ANALYSIS 49
5 CHAPTER 5-FINDINGS

5.1 FINDINGS 60
5.2 SUGGESTION AND RECOMMENDATION 62
5.3 CONCLUSION 63
 LIST OF TABLES

TABLE NO TITLE PAGE NO

4.1 ROCE (RETURN ON CAPITAL EMPLOYED 27

4.2 NET PROFILE MARGIN (%) 29

4.3 OPERATING PROFIT MARGIN 31

4.4 RETURN ON ASSESTS (%) 33

4.5 RETURN ON EQUITY (%) 35

4.6 COST OF INCOME 37

4.7 NET INTEREST MARGIN 39

4.8 NON-INTEREST INCOME / TOTAL ASSETS (%) 41

4.9 OPERATING PROFIT / TOTAL ASSETS (%) 43

5.0 OPERATING EXPENSES / TOTAL ASSETS (%) 45

5.1 INTEREST EXPENSES / TOTAL ASSETS (%) 47

 LISTS OF CHARTS

TABLE NO TITLE PAGE NO

4.1 ROCE (RETURN ON CAPITAL EMPLOYED) 28

4.2 NET PROFIT MARGIN (%) 30

4.3 OPERATING PROFIT MARGIN 32

4.4 RETURN ON ASSETS (%) 34

4.5 RETURN ON EQUITY (%) 36

4.6 COST OF INCOME 38

4.7 NET INTEREST MARGIN 40

4.8 NON-INTEREST INCOME / TOTAL ASSETS (%) 42

4.9 OPERATING PROFIT / TOATL ASSETS (%) 44

5.0 OPERATING EXPENSES / TOTAL ASSETS (%) 46

5.1 INTEREST EXPENSES / TOTAL ASSETS (%) 48

 CHAPTER - 1

1.1 Introduction

Investment, the process of exchanging income during one period of time for an asset
that is expected to produce earnings in future periods. Thus, consumption in the current
period is foregone in order to obtain a greater return in the future. For an economy as a
whole to invest, total production must exceed total consumption. Throughout the
history of capitalism, investment has been primarily the function of private business;
during the 20' century, however, governments in planned economies and developing
countries have become important investors.

In India, different range of investment opportunities exist namely postal savings, bank
deposits, mutual funds, equity shares, preference shares, bonds and so on. However,
investment in the stock market i.e., equity shares and preference shares play a crucial
role in the mindset of investors. In order to get maximum returns from investment,
investors are willing to take high-risk security. However, there are issues in stock
market investment in finding the right combination of risk and return. If the investors
identified the right combination of these two, obviously return from the investment will
be high but majority of the investors fail to identify and know the concept of risk and
return. Hence, an attempt to study the risk and return analysis of selected Bank Nifty
stocks has been taken.

1
What is the Nifty?

Like the Sensex, Nifty is a popular equity index in India. The Nifty is composed of 50 stocks.
The Nifty 50 is owned and managed by NSE Indices Limited. As an index, the Nifty 50 Index
represents about 66.8% of the free float market capitalization of the stocks listed on NSE as on
March 29, 2019. A highly efficient index, the impact cost of the Nifty for a portfolio size of Rs 50
lakh is about 0.02%.

The Nifty 50 was launched on April 1 in the year 1996, and is one of the many stock indices of
NSE. It can be traded and invested in by investors as well as market intermediaries. Other
popular indices include Bank Nifty, Nifty IT just to name a few. Do note that Nifty index
variants include NIFTY50 USD, NIFTY 50 Total Returns Index and NIFTY50 Dividend Points
Index.

WHICH SECTORS ARE COVERED IN NIFTY?

In terms of sector representation, the Nifty consists of stocks from key sectors of the Indian
economy. Financial services accounts for 40.39% weight, followed by Energy 14.38%, IT
13.71%, Consumer goods 10.66%, Automobiles 5.71%, Construction
3.99%, Metals 3.61%, Pharmaceuticals 2.15%, Telecom 1.84%, Cement & cement products
1.74%, Fertilizers & pesticides 0.72%, Services 0.67% and Media & entertainment 0.42%.

HOW IS NIFTY CALCULATED?

From June 26, 2009, NIFTY 50 started being computed based on free float methodology. The
index is calculated on a real-time daily basis. Nifty is rebalanced semi-annually.
2
WHAT IS BANK NIFTY?

Nifty Bank, or Bank Nifty, is an index comprised of the most liquid and large capitalized
Indian banking stocks. It provides investors with a benchmark that captures the capital market
performance of Indian bank stocks. The index has 12 stocks from the banking sector. The top
stocks of the index include HDFC Bank Ltd. 31.61%, ICICI Bank Ltd. 18.20%, Axis Bank
Ltd. 13.02%, Kotak Mahindra Bank Ltd. 12.74% and State Bank of India 10.92%. Bank
Nifty, like others, is computed using free float market capitalization method. It's index variant
includes NIFTY Bank Total Returns Index or Bank Nifty TRI. The index was launched in
2003.

Banks play an important role in supporting economic growth and have proved to be more
volatile than the pure diversified equity funds which make some of them a high-risk
proposition. Equity investment includes high risk at the same time it earns higher return
unusually high returns may not be sustainable. Since the banking industry is under the control
of Reserve Bank of India (RBI), it is adversely used as the tool to control the external
problems like inflation, interest rate, and money supply. Because of this, there is a high
instability in the share price that reduces the real investor’s interest. This study is structured
to analyze the performance of the selected shares in the banking industry to reveal the risk
and return in a particular period of time and the investor’s perception towards the Banking
industry. Bank Nifty represents the 12 most liquid and large capitalized stocks from the
banking sector which trade on the National Stock Exchange (NSE). It provides investors and
market intermediaries a benchmark that captures the capital market performance of Indian
banking sector.
3
Nifty Bank Index

Nifty Bank Index is an index comprised of the most liquid and large capitalized Indian
Banking stocks. It provides investors and market intermediaries with a benchmark that
captures the capital market performance of Indian Bank

The 12 banks which comes under NIFTY Banks are:

S.NO COMPANY NAME SYMBOL

1 Axis Bank Ltd. AXISBANK
2 Bandhan Bank Ltd. BANDHANBNK
3 Bank of Baroda BANKBARODA
4 Federal Bank Ltd. FEDERALBNK
5 HDFC Bank Ltd. HDFCBANK
6 ICICI Bank Ltd. ICICIBANK
7 IDFC First Bank Ltd. IDFCFIRSTB
8 IndusInd Bank Ltd. INDUSINDBK
9 Kotak Mahindra Bank Ltd. KOTAKBANK
10 Punjab National Bank PNB
11 RBL Bank Ltd. RBLBANK
12 State Bank of India SBIN

4
1.1 Industry profile

As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently
capitalized and well-regulated. The financial and economic conditions in the country
are far superior to any other country in the world. Credit, market and liquidity risk
studies suggest that Indian banks are generally resilient and have withstood the global
downturn well.

Indian banking industry has recently witnessed the roll out of innovative banking
models like payments and small finance banks. RBI’s new measures may go a long way
in helping the restructuring of the domestic banking industry.

The digital payments system in India has evolved the most among 25 countries with
India’s Immediate Payment Service (IMPS) being the only system at level five in the
Faster Payments Innovation Index (FPII).
5
 Market Size

The Indian banking system consists of 12 public sector banks, 22 private sector banks,
46 foreign banks, 56 regional rural banks, 1485 urban cooperative banks and 96,000
rural cooperative banks in addition to cooperative credit institutions. As of September
2020, the total number of ATMs in India increased to 210,049 and is further expected
to increase to 407,000 by 2021.

Asset of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion) in FY20.

During FY16-FY20, bank credit grew at a CAGR of 3.57%. As of FY20, total credit
extended surged to US$ 1,698.97 billion.

During FY16-FY20, deposits grew at a CAGR of 13.93% and reached US$ 1.93 trillion
by FY20. Credit to non-food industries stood at Rs. 103.46 trillion (US$
1.40 trillion) as of November 20, 2020.

Investments/Developments

Key investments and developments in India’s banking industry include:

 On November 6, 2020, WhatsApp started UPI payments service in India on receiving

the National Payments Corporation of India (NPCI) approval to ‘Go Live’ on UPI in a
graded manner.
 In October 2020, HDFC Bank and Apollo Hospitals partnered to launch the ‘Healthy
Life Programme’, a holistic healthcare solution that makes healthy living accessible
and affordable on Apollo’s digital platform.
 In 2019, banking and financial services witnessed 32 M&A (merger and acquisition)
activities worth US$ 1.72 billion.
 In March 2020, State Bank of India (SBI), India’s largest lender, raised US$ 100
million in green bonds through private placement.

6
 In February 2020, the Cabinet Committee on Economic Affairs gave its approval for
continuation of the process of recapitalization of Regional Rural Banks (RRBs) by
providing minimum regulatory capital to RRBs for another year beyond 2019-20 - till
2020-21 to those RRBs which are unable to maintain minimum Capital to Risk
weighted Assets Ratio (CRAR) of 9% as per the regulatory norms prescribed by RBI.
 In October 2019, Department of Post launched the mobile banking facility for all post
office savings account holders of CBS (core banking solutions) post office.
 Deposits under Pradhan Mantri Jan Dhan Yojana (PMJDY) stood at Rs. 1.06 lakh
crore (US$ 15.17 billion.
 In October 2019, Government e-Marketplace (GeM) signed a memorandum of
understanding (MoU) with Union Bank of India to facilitate a cashless, paperless and
transparent payment system for an array of services.
 In August 2019, the Government announced major mergers of public sector banks,
which included United Bank of India and Oriental Bank of Commerce to be merged
with Punjab National Bank, Allahabad Bank to be amalgamated with Indian Bank and
Andhra Bank and Corporation Bank to be consolidated with Union Bank of India.
 The NPAs (Non-Performing Assets) of commercial banks recorded a recovery of
Rs.400,000 crores (US$ 57.23 billion) in the last four years including record recovery
of Rs. 156,746 crores (US$ 22.42 billion) in FY19.

 Allahabad Bank’s board approved the merger with Indian bank for the consolidation of
10 state-run banks into the large-scale lenders.

 The total equity funding of microfinance sector grew at 42 y-o-y to Rs. 14,206 crores
(US$ 2.03 billion) in 2018-19.

7
Government Initiatives

 As per Union Budget 2019-20, the Government proposed fully automated GST refund
module and an electronic invoice system that will eliminate the need for a separate e-
way bill.
 Under the Budget 2019-20, Government proposed Rs. 70,000 crores (US$ 10.2 billion)
to the public sector banks.
 Government smoothly carried out consolidation, reducing the number of Public Sector
Banks by eight.

 As of September 2018, the Government of India made Pradhan Mantri Jan Dhan
Yojana (PMJDY) scheme an open-ended scheme and added more incentives.
 The Government of India planned to inject Rs. 42,000 crore (US$ 5.99 billion) in
public sector banks by March.
Achievements

Following are the achievements of the Government:

 In November 2020, Unified Payments Interface (UPI) recorded 2.21 billion

transactions worth Rs. 3.90 lakh crore (US$ 53.06 billion).
 According to the RBI, India’s foreign exchange reserve reached US$ 574.82 billion
as of November 27, 2020.

 To improve infrastructure in villages, 204,000 point of sale (PoS) terminals have been
sanctioned from the Financial Inclusion Fund by National Bank for Agriculture &
Rural Development (NABARD).

Road Ahead

Enhanced spending on infrastructure, speedy implementation of projects and

continuation of reforms are expected to provide further impetus to growth in the
banking sector. All these factors suggest that India’s banking sector is poised for a
robust growth as rapidly growing businesses will turn to banks for their credit needs.

8
Also, the advancement in technology has brought mobile and internet banking services
to the fore. The banking sector is laying greater emphasis on providing improved
services to their clients and upgrading their technology infrastructure to enhance
customer’s overall experience as well as give banks a competitive edge.

India’s digital lending stood at US$ 75 billion in FY18 and is estimated to reach US$ 1
trillion by FY23 driven by the five-fold increase in the digital disbursements.

9
1.2 Company profile

Kotak Mahindra is one of India's leading banking and financial services organizations,
offering a wide range of financial services that encompass every sphere of life. From
commercial banking, to stock broking, to mutual funds, to life insurance, to investment
banking, the group caters to the diverse financial needs of individuals and corporate
sector.

The Group has a net worth of over Rs. 12,900 crores and has a distribution network of
branches, franchisees, representative offices and satellite offices across cities and towns
in India. It has offices in London, New York, California, Dubai, Abu Dhabi, Bahrain,
Mauritius, & Singapore and is servicing around 10 million customer accounts.

Kotak Securities was founded in 1994 as a subsidiary of Kotak Mahindra Bank and is
proud to be the nation’s best broker today.

Our numbers speak for ourselves:

17 Lakh customer accounts Over

8 Lakh trades per day

Our national footprint is 1,539 branches, franchisees and satellite offices We

cater to customers from 393 cities across India

We are corporate members with the Bombay Stock Exchange (BSE) and the National
Stock Exchange (NSE). We are also a depository participant with National Securities
Depository Limited (NSDL) and Central Depository Services Limited (CDSL).

10
 1.3 Product profile

Kotak Securities provides a wide range of products and services that fulfil a broad mix
of investment needs. Kotak Securities strives to enhance the product line-up in order to
meet your investment needs and to establish a solid presence as a firm trusted by our
valued customers.

A capital market is a market for securities (debt or equity), where business enterprises
and the government can raise long-term funds. Capital market instruments, also known
as financial instruments, are responsible for generating these funds, which can be used
by customers to invest wisely.

Asset Class

Kotak Securities is a one stop solution, where you can trade in different types of
instruments. These instruments are available for trading on NSE and BSE and can be
classified as:

 Equity
Equities are traded on the stock market. These could be in the primary or secondary
market. In the primary market, companies get listed through an Initial Public Offering.
Thus, new securities are available in the primary market. In the secondary market,
investors buy or sell securities, which have already been issued. Currently, more than
1300 securities are available for trading on the National Stock Exchange (NSE) and
over 6000 on Bombay Stock Exchange (BSE).
 Derivatives
Derivatives give you an avenue to boost your returns from equities, by providing
leverage through products like futures and options. Derivative instruments are available
for shares, indices, currencies as well as commodities. Their value is tied to the
underlying security.
11
 Mutual Funds
Mutual funds are ideal for investors who want to invest in Indian equities, but do not
have sufficient time and skills to choose winning sectors. Another advantage of
investing in mutual funds is that it provides the necessary diversification to the
portfolio. The money is invested across a wide variety of assets like stocks, bonds,
gold, etc. to earn returns.
 Initial Public Offerings (IPO)
An IPO is the first sale of a company’s equity to the public. Existing shareholders can
get an exit route or a better value for their investment. One can also be the part of the
growth story of the issuing company.
 Currency Derivatives
Currency derivatives is a contract between the seller and buyer, whose value is to be
derived from the underlying asset, the currency value. It offers two advantages to the
traders: an opportunity to benefit from currency value fluctuations, and a chance to
minimize loss from currency value fluctuations due to various factors.
 Tax Free Bonds
Bonds are a kind of debt instrument. By investing in this type of asset, the investor
gives a loan to the issuing entity. The investors will be repaid at the end of the tenure.
There are different kinds of bonds. Those bonds which are exempted from taxation on
the interest income under the Income Tax Act, 1961 are called tax-free bonds. These
are usually issued by government-backed entities.
 Gold Funds
Gold ETFs are open-ended Mutual Funds that invest in Standard Gold Bullion of
99.5% purity. Instead of buying physical gold bullion, you can buy units of Gold ETFs
that are equivalent to buying the real thing. The units you buy are stored in your demat
account. This is why Gold ETFs are also called 'Paper Gold'.
12
 Stock Lending and Borrowing (SLB)
SLB is a system in which a trader can borrow shares that they do not already own, or
can lend the stocks that they own. An SLB transaction has a rate of interest and a fixed
tenure. SLBM helps reduce potential risks and losses.

 Interest Rate Futures (IRF)

An IRF is an agreement to buy, or sell, a debt instrument at a future date for a price
fixed today. The underlying security for IRFs is usually a government bond or a treasury
bill. In India, National Stock Exchange and Bombay Stock Exchange offer trading in
interest rate futures.

13
 Account Type

You may choose from any of the below accounts and start trading:

 Trinity account - Trinity account is a seamless investment platform that integrates a

savings account, a demat account and an online trading account into one great service.

 2-in-1 account - The 2-in-1 trading account gives you the dual benefit of a share
trading account and a demat account rolled into one account.

 Demat account - A dematerialized or demat account is a facility that allows customers

to hold shares in an electronic format. You need a demat account before you start to trade
on India’s stock exchanges.

 Equity trading account - When you trade on the stock markets, you are securing your
financial well-being. Equity trading account allows you to invest in equity, initial public
offerings or IPOs, mutual funds, equity and currency derivatives instruments.

 Linked account – A linked account is essentially, a 3-in-1 trading account that links
your existing savings and demat account with the partner bank and trading account at
Kotak Securities.

 NRI account - Living outside India, but still want to play in the Indian stock markets?
Here’s an account that lets you enjoy the triple benefits of a savings account, a demat
account and a trading account all in one place. So be it buying equities, futures or options
or even doing some good old-fashioned research into the stock markets, Kotak
Securities’ NRI account puts the power in your hands.

14
 Qualified Foreign Investors (QFI) - If you reside outside India and like many other
look at India as an interesting option for investment, here is your chance to invest in the
ever buzzing financial markets of India. On 1 January 2012, the GOI issued a press note
stating that Qualified Foreign Investors (QFIs) will now be allowed to invest in the
equity shares of Indian companies.

 RGESS - If you are new to the equity markets, and don’t know where to start, fear not;
you are at the right place. The Rajiv Gandhi Equity Savings Scheme or the RGESS is an
investment option that allows you to enjoy the benefits of equity investments along with
tax exemptions up to Rs. 25,000.

 PMS - The stock market is highly volatile. Investment in the market, therefore, requires
time, knowledge, and constant monitoring. It also needs a solid experience and strong
research to make the right decision. As a result, there are many who wish for an expert to
help manage their investments. If you are one among them, then portfolio management
services (PMS) is your answer.

15
1.4 NEED FOR THE STUDY

Before investing in any budgetary instrument, the financial specialist considers cost of
shares from different organizations listed in stock traders. However, prices are different
at every time at every organization at every bank. In this unexpected situation risk and
return is needed. This study was conducted to analyze the nifty movement behavior
towards the banking stocks. It also evaluates the performance of banking share stock
mainly the identification of required rate of return and risk of a particular stock based
upon different risk elements prevailing in the market and other economic factors. And
is structured to analyze the performance of the selected shares in the banking industry
to reveal the risk and return in a particular period of time. This helps to fill data gaps
then, each and every investor can decrease the risk by taking informed decisions.
16
1.6 OBJECTIVE OF THE STUDY
The overall objective of the study is to examine the risk and return analysis of
selected Nifty Bank Index stocks. The following are specific objectives.

 To study the banks' stock movement with respect to Nifty 50 index.

 To know the average returns and risk of each selected stocks.

1.7 SCOPE OF THE STUDY

 The historical data is purely helpful for this study.

 Limited time period (Data should not exceed more than 5years).
 The investigation of this project is limited with banks (private and nationalized banks)
which are trade demand listed in stock exchanges.
 In this study of risk and return 3 banks are selected.
 Risk and return of equity shares are computed using straight forward techniques.

17
1.8 LIMITATIONS OF THE STUDY

 The sample for the study is 3 banks listed under Bank Nifty.
 The study is limited to only these selected banks and covers the year wise performance
of the stocks for the study for the period of 5 years i.e., from 2017 to 2022.

18
 CHAPTER - 2

2. LITERATURE REVIEW

A literature review is a complete summary of previous research on the topic of

research. The literature review may include surveys, original research / fieldwork, research
published in scholarly / academic journals, books and articles. Indexes, Abstracts,
Databases and other sources relevant to the area of research. The review should define,
outline, describe, explain, enumerate, summarize, evaluate and clarify the preceding
research. It should provide a theoretical base for the research and help in deciding the
nature of the research.
19
2.1 STUDY ON COMPARISON OF RISK-RETURN ANALYSIS OF PUBLIC
AND PRIVATE SECTOR BANKS LISTED ON NIFTY BANK

Suresh A.S.

Assistant Professor, MBA Department, PES Institute of Technology

Risk and Return analysis play a very important role in individual decision-making process.
If the investor wishes to earn more return investor should be in the position to accept
higher risk. Banking sector is the backbone of the county’s economy and this sector has
contributed good returns for the investor in the past. The paper concentrates on analyzing
the performance of twelve nationalized banks listed in NSE in terms of return, risk and
beta for the period 1st January 2016 to 31st December 2016. Sector wise portfolio returns
are also calculated for the same period, to compare the returns generated by public and
private sector

banks. This paper analyses the performance of banking sector taking Bank Nifty Index as
benchmark. The study is based on secondary data collected from NSE. The data were
collected based on the monthly prices of the banking stocks listed in Bank Nifty. The
study shows that the shares of Yes bank and Federal bank have given positive returns
during the study periods. Whereas the return of Axis Bank, Bank of Baroda and Bank of
India were negative during the same period. The beta of Bank of India, Canara Bank,
Punjab National Bank, State Bank of India, Axis Bank, ICICI Bank and Yes Bank were
more than one, indicating that these stocks carry a higher market risk. The reason for
choosing monthly prices is to measure the short-term fluctuations in the banking stocks
due to changes in market factors.
20
2.2 RISK AND RETURN WITH REFERENCE TO SELECTED STOCKS OF
NIFTY BANK

Dr s Poornima &Swathiga P (2017)

He studied the relationship between risk and return on the basis of capital asset pricing
model. In his study there are 2 sectors namely automobile and IT sectors. Which are listed in
NSE. From his study automobile companies are performed better and improved growth in the
market.

Dr s Nirmala & k Devendran (2017)

If a particular investor wants to earn high returns, it can be done with commensurate increase
in risk long term investor has the advantage in the market when less volatile has seen.

Shalini Naveen & T Mallikarjunappa (2016)

In this report of bank nifty, it is said that some stocks will move along and some move in the
reverse direction of market. At last it is been suggested that investments in Indusland bank,
Federal bank, Axis bank, Yes bank, HDFC bank, Bank of India, Kotak Mahindra, State bank
of India, ICICI bank are feasible because of the positive returns.

Bedanta Bora &AninditaAdhikary (2015)

According to this study, it is said that investment in stock market is suggested to various risk
return the investors get from contents that may fluctuate from expected return
21
always the investor makes a decision before investing in a company, whether that
company has high positive returns.

Raghavan R. S (2000)

Opinion is risk measures are related to return measurements; Minimum risks have to be taken
to get adequate returns. Investment Returns can be increased or made quicker by taking more
financial and operating risks. But the environmental risks typically do not increase
investment returns.

Dr.M Muthu Gopalakrishnan & Dr K.V. Ramanathan (2013)

Studied post and prerecession period Indian stock market price fluctuations. The volatility in
the market required to estimate the risk on investment. Researcher analyses the selected
indexed stock volatility of sectoral in Nifty as on 28-03-2013 daily opening and closing price
of 31 selected companies. This analysis helps in identifying volatility relationship during pre-
and post-recession period.

T. Mallikarjunappa and Shaini Naveen (2016)

Conducted a study on Comparative Analysis of Risk and Return with Reference to Stocks of
CNX Bank Nifty. This study analyzes the risk and returns in the banking sector. The
researchers compare the 12 listed banks in the Nifty through analyses of the performance of
banking stocks mainly to understand the required rate of return and risk. In this analysis
found some stocks move in the opposite direction to the Stock market, some stocks move
along with the market, some stocks are less volatile compared to the market and some stocks
are more volatile compared to the market.

22
S Poornima and Swathiga P (2017)

Investigated the study in relationship BCMT Teen risk and return of selected stocks from two
different sectors on NSE with the help of Capital Asset. Pricing Model (CAPM). The risk and
return analysis linked with any industry reveal the intricacies involved with the particular
industry. A study revealed that the automobile sector showing positive return and low risk
and IT sector showing negative return and high risk during the study period.

Subramanyam and Nalla Bala Kalyan (2018)

The risk-return investigation helps the investor to pick up the securities based on his choice.
The study provides information about the performance of various stocks in the market in
terms of risk and return. The study emphasized on the market fluctuations in relation to the
prices of scrip's, though it is difficult to observe the pattern of the price movement's efforts
that have been taken using fundamental analysis and technical analysis.

Nana Bala Kalyan and S Gautarni (2018)

The study focused on the risk and return of the selected mutual funds' schemes in India. Risk
refers to relatively objective probabilities which can be computed on the basis of past
experience or some prior principle. The empirical results of Beta revealed that Tata contra
fund 0.30) is having a high risk when compared to another contra fund Magnum contra fund
(1.09), Kotak contra fund (a94), UTI contra fund (0.63), and L&T contra fund (0.32).

23
P Naveen and K Neeraja (2018)

The Risk and Return Analysis of Equity Shares in the Banking Sector. The study concluded
that some of the banks have higher returns and also some banks with high risk. Whatever it
may be the investor always needs a combination with higher returns and low risk. Here the
beta is useful to judge where the systematic risk is high.

Kusuma Perikalal Karishma Reddy (2019)

The risk-return relationship of Indian equity markets, S&P NSE NIFTY and CNX Nifty, for the
period 2008-2009 through 2017-2018. The results indicate that on an aggregate basis both the
indices performed similar except in the year 2013-2014 in which CNX Nifty outperformed.
The study also reveals that Indian equity markets yielded negative returns in the year 2008-
2009 and rocketed in the subsequent year.

24
 CHAPTER - 3

3.RESEARCH METHODOLOGY

DATA COLLECTION METHODS

 PRIMARY DATA: The data whatever we receive directly without

publishing.

 SECONDARY DATA: The data gathered through NSE SITE and esteem
research.

 SOURCES OF DATA: The optional information has taken from various

websites and books

25
3.1 RESEARCH DESIGN

This task is completely based on indicative and descriptive research. Under this
descriptive research, it is structured to find out the issues. The secondary data is taken to
finish this project.

 DATA: For the investigation of risk and return banks equity costs from the year
2017 to 2022 are selected.

 METHOD OF SAMPLING: Deliberate sampling technique because it means

to select the banking area and particular unit.

 SAMPLE SIZE: To analyse the risk and return five banks are chosen

BANK STOCKS SELECTED FOR THIS STUDY

1. HDFC BANK
2. KOTAK MAHINDRA BANK
3. AXIS BANK
4. ICICI BANK
5. INDUSIND BANK

26
 CHAPTER - 4

Table 1: ROCE (Return On Capital Employed)

HDFC ICICI Kotak Mahindra AXIS Indusind

Bank Bank Bank Bank Bank
2022 -
2021 3.42 3.1 3.32 2.7 3.34
2021 -
2020 3.33 2.67 2.86 2.68 3.62
2020 -
2019 3.34 2.52 2.77 2.47 3
2019 -
2018 3.2 2.91 2.8 2.34 3.11
2018 -
2017 3.18 3.59 2.9 3.05 3.21

From the above chart we can understand that the HDFC Bank’s current ROCE is little
better than the other banks as well the Indusind bank and the Kotak Mahindra bank is little
closer to the HDFC bank but the ICICI bank is little lower and the AXIS bank is the lowest.
So it is very clear that HDFC bank along with the Indusind bank and the Kotak Mahindra
bank stands better.

27
 Figure 1: ROCE (Return on Capital Employed)

3.5

2.5
HDFC Bank
2 ICICI Bank

1.5 Kotak Mahindra Bank

AXIS Bank
Indusind Bank
1

0.5

0
2022 - 2021 2021 - 2020 2020 - 2019 2019 - 2018 2018 - 2017

28
 Table 2: NET PROFIT MARGIN (%)

HDFC ICICI Kotak Mahindra AXIS Indusind

Bank Bank Bank Bank Bank
2022 -
2021 25.74 20.46 25.94 10.35 9.78
2021 -
2020 22.86 10.6 22.08 2.59 15.34
2020 -
2019 21.29 5.3 20.32 8.5 14.82
2019 -
2018 21.79 12.33 50.75 0.6 20.86
2018 -
2017 20.99 18.09 43.99 8.26 19.9

From this above chart we can see that HDFC bank also stands the best here as well
and we can also see that the Kotak Mahindra bank’s Net Profit Margin have decreased a lot
in the past but even it is one in the top and all the other three have never crossed the Net
Profit Margin of HDFC and Kotak Mahindra bank.

29
 Figure 2: NET PROFIT MARGIN (%)

60

50

40
HDFC Bank
ICICI Bank
30
Kotak Mahindra Bank
20 AXIS Bank
Indusind Bank
10

0
2022 -2021 -2020 -2019 -2018 -
20212020201920182017

30
 Table 3: Operating Profit Margin

HDFC ICICI Kotak Mahindra AXIS Indusind

Bank Bank Bank Bank Bank
2021 -
2022 4.89 -3.5 5.6 -12.96 -12.83
2020 -
2021 2.6 -11.38 2.13 -22.2 -8.8
2019 -
2020 3.48 -17.58 1.09 -15.37 -10.53
2018 -
2019 2.82 -19.36 0.16 -23.35 -6.62
2017 -
2018 3.25 -17.91 -0.37 -17.98 -9.04

From the above chart it is very clear that the operating profit of the HDFC Bank is at
the top and the ICICI Bank’s operating profit have decreased a lot over the period as well the
AXIS Bank and the Indusind Bank have not been much impressive but the Kotak Mahindra
Bank was been little high but not much as HDFC bank

31
 Figure 3: Operating Profit Margin

10

0
2021 - 2022 2020 - 2021 2019 - 2020 2018 - 2019 2017 - 2018 HDFC Bank
-5 ICICI Bank

Kotak Mahindra Bank

-10
AXIS Bank
Indusind Bank
-15

-20

-25

32
 Table 4: Return on Assets (%)

HDFC ICICI Kotak MahIndra AXIS Indusind

Bank Bank Bank Bank Bank
2021 -
2022 1.78 1.31 1.81 0.66 0.78
2020 -
2021 1.71 0.72 1.65 0.17 1.43
2019 -
2020 1.69 0.34 1.55 0.58 1.18
2018 -
2019 1.64 0.77 1.54 0.03 1.62
2017 -
2018 1.68 1.26 1.58 0.61 1.6

The Return on Assets of HDFC Bank is been consistently high and Kotak Mahindra
Bank is little below but has a sturdy Return on Assets. Over the time the return on Assets of
Indusind bank have grownup toward the HDFC Bank. The AXIS Bank was been near the
bottem line. The ICICI Bank have faced as deflation in past and now it is getting better.

33
 Figure 4: Return on Assets (%)

1.8

1.6

1.4 HDFC Bank

1.2 ICICI Bank

1 Kotak MahIndra Bank

AXIS Bank
0.8 Indusind Bank

0.6
0.4

0.2

0
2021 - 2022 2020 - 2021 2019 - 2020 2018 - 2019 2017 - 2018

34
 Table 5: Return on Equity (%)

HDFC ICICI Kotak Mahindra AXIS Indusind

Bank Bank Bank Bank Bank
2021 –
2022 15.27 11.21 11.01 6.48 6.58
2020 –
2021 15.35 6.99 12.25 1.91 12.84
2019 –
2020 14.12 3.19 11.47 7.01 12.52
2018 –
2019 16.45 6.63 10.89 0.43 15.35
2017 –
2018 16.26 10.11 12.35 6.59 14.14

The HDFC Bank stands at the top of all the banks and the second place is getting hold
by the Indusind Bank with have increased really in good way. Kotak Mahindra Bank stays in
middle for a long period. The ICICI Bank have got a good recovery and the AXIS Banks was
been at the least and inconsistent.

35
 Figure 5: Return On Equity (%)

18

16

14

12 HDFC Bank
10 ICICI Bank

8 Kotak Mahindra Bank

AXIS Bank
6 Indusind Bank
4

0
2021 - 2022 2020 - 2021 2019 - 2020 2018 - 2019 2017 - 2018

36
 Table 6: Cost of Income

Kotak Mahindra Indusind

HDFC Bank ICICI Bank Bank AXIS Bank Bank

2021 – 2022 40.37 42.57 42.83 47.76 48.51

2020 – 2021 38.52 45.79 40.01 50.03 40.83

2019 – 2020 38.41 48.98 38.52 44.28 10.1

2018 – 2019 39.62 46.51 39.91 51.64 39.22

2017 – 2018 37.84 42.68 38.68 46.42 39.65

The cost of Income of the HDFC Bank, Indusind Bank and the Kotak Mahindra Bank
was been more or less the same as the Cost of Income of the AXIS Bank is the highest of all
and the ICICI Bank comes the second which is little low but high then the all the other three.

37
 Figure 6: Cost of Income

60

50

40
HDFC Bank
ICICI Bank
30
Kotak Mahindra Bank
AXIS Bank
20 Indusind Bank

10

0
2021 - 2022 2020 - 2021 2019 - 2020 2018 - 2019 2017 - 2018

38
 Table 7:NET INTEREST MARGIN

Interest Income / Total Assets (%)

HDFC ICICI Kotak Mahindra AXIS Indusind

Bank Bank Bank Bank Bank
2021 –
2022 6.91 6.43 6.99 6.38 7.98
2020 –
2021 7.5 6.8 7.47 6.84 9.37
2019 –
2020 7.95 6.57 7.66 6.86 8.01
2018 –
2019 7.54 6.25 7.45 6.62 7.79
2017 –
2018 8.02 7.01 8.24 7.4 8.06

The HDFC Bank Stands along with the Indusind Bank and Kotak Mahindra Bank.
The Lowest is ICICI Bank and the second Lowest is the AXIS Bank.

39
 Figure 7:NET INTEREST MARGIN

10

7 HDFC Bank
6 ICICI Bank

5 Kotak Mahindra Bank

AXIS Bank
4 Indusind Bank

23

0
2021 - 2022 2020 - 2021 2019 - 2020 2018 - 2019 2017 - 2018

40
 Table 8: Non-Interest Income / Total Assets (%)

HDFC ICICI Kotak Mahindra AXIS Indusind

Bank. Bank Bank Bank Bank
2021 –
2022 1.44 1.54 1.42 1.48 1.8
2020 –
2021 1.51 1.49 1.49 1.69 2.26
2019 –
2020 1.41 1.5 1.47 1.63 2.03
2018 –
2019 1.43 1.98 1.52 1.58 2.14
2017 –
2018 1.42 2.52 1.62 1.94 2.33

The ICICI Bank stands at the top and HDFC Bank stands at second. Then AXIS Bank
stays in between and Kotak Mahindra Bank is at the fourth place and last comes the Indusind
Bank.

41
 Figure 8: Non-Interest Income / Total Assets (%)

2.5

2
HDFC Bank.
ICICI Bank
1.5
Kotak Mahindra Bank
AXIS Bank
1 Indusind Bank

0.5

0
2021 - 2022 2020 - 2021 2019 - 2020 2018 - 2019 2017 - 2018

42
 Table 9: Operating Profit / Total Assets (%)

HDFC ICICI Kotak Mahindra AXIS Indusind

Bank Bank Bank Bank Bank
2021 -
2022 0.33 -0.22 0.39 -0.82 -1.02
2020 -
2021 0.19 -0.77 0.15 -1.51 -0.82
2019 -
2020 0.27 -1.15 0.08 -1.05 -0.84
2018 -
2019 0.21 -1.21 0.01 -1.54 -0.51
2017 -
2018 0.26 -1.25 -0.03 -1.33 -0.72

The HDFC Bank stands at the top and then follows the Kotak Mahindra Bank , and
the only are the banks which stays above the line. And all the three stands the below the line
where the AXIS Bank and the ICICI Bank at most equal and the Indusind Bank Stands little
higher then the two Banks.

43
 Figure 9: Operating Profit / Total Assets (%)

0.5

0
2021 - 2022 2020 - 2021 2019 - 2020 2018 - 2019 2017 - 2018
HDFC Bank
-0.5 ICICI Bank

Kotak Mahindra Bank

-1 AXIS Bank
Indusind Bank

-1.5

-2

44
 Table 10: Operating Expenses / Total Assets (%)

HDFC ICICI Kotak Mahindra AXIS Indusind

Bank Bank Bank Bank Bank
2021 -
2022 1.87 1.75 2.23 1.84 2.3
2020 -
2021 2 1.96 2.45 1.89 2.68
2019 -
2020 2.09 1.87 2.4 1.97 2.3
2018 -
2019 2.13 1.78 2.42 2.02 2.52
2017 -
2018 2.28 1.91 2.61 2.02 2.67

The expenses of ICICI Bank is low than the other bank where as the expenses of the
Indusind Bank is the highest. The expenses of the HDFC Bank is moderate where as the
expenses of Kotak Mahindra Bank is little high as Indusind Bank and the AXIS Bank stays
between HDFC Bank and ICICI Bank.

45
 Figure 10: Operating Expenses / Total Assets
(%)

2.5

2
HDFC Bank
ICICI Bank
1.5
Kotak Mahindra Bank
AXIS Bank
1 Indusind Bank

0.5

0
2021 - 2022 2020 - 2021 2019 - 2020 2018 - 2019 2017 - 2018

46
 Table 11: Interest Expenses / Total Assets (%)

HDFC ICICI Kotak Mahindra AXIS Indusind

Bank Bank Bank Bank Bank
2021 -
2022 3.2 3.26 2.99 3.45 4.26
2020 -
2021 3.83 3.78 3.72 4.08 5.44
2019 –
2020 4.07 3.77 4.06 4.15 4.82
2018 -
2019 3.77 3.63 3.85 3.92 4.41
2017 -
2018 4.18 4.2 4.46 4.39 4.67

The interest expenses of Indusind Bank is very high than the other bank and all othe
bank’s Interest expenses are more are less equal. The interest expenses of the Kotak
Mahindra bank is the lowest. The interest expenses of the HDFC Bank and ICICI bank are
more or less the same.

47
 Figure 11: Interest Expenses / Total Assets (%)

4
HDFC Bank
ICICI Bank
3
Kotal Mahindra Bank
AXIS Bank
2 Indusind Bank

0
2021 - 2022 2020 - 2021 2019 - 2020 2018 - 2019 2017 - 2018

48
SWOT

Strengths of HDFC
HDFC’s strengths are internal, good characteristics that are under the company’s control and the
reason for its success. They are as follows.

 Large Network of Branches: HDFC Bank is India’s second-largest private banking

sector, with 2,201 branches and 7,110 ATMs.
 Strong Consumer Banking: The ATM card issued by the bank is compatible with all
domestic and international Visa/Master cards, Visa Electron/Maestro, and American Express
cards. This is one of the reasons why HDFC cards are the most popular for shopping and
online transactions.
 Higher Customer Satisfaction: When compared to other private banks, it has a high
level of customer satisfaction.
 High Employee Retention Rate: The bank has a low employee turnover rate and is
regarded as one of the best places to work in the private banking sector.
 Brand’s Goodwill: It has received numerous awards and recognition, including the title
of “Best Bank” from various financial rating institutions such as Dun and Bradstreet,
Financial Express, Euromoney Awards for Excellence, and Finance Asia Country Awards.

Weaknesses Of HDFC
Weaknesses are flaws that detract from one’s strengths. These are areas that the business may need to
improve to remain competitive.

 No Rural Presence: HDFC Bank does not have a strong presence in rural areas,
whereas ICICI Bank is expanding in the rural market.
 Limited Market Size: Unlike ICICI, HDFC lacks aggressive marketing strategies. The
bank primarily serves high-end clients.
 Underperforming Sectors: Some of the bank’s product categories are
underperforming and have limited market reach.
 Fluctuating Share Prices: The share price of the bank fluctuates frequently, causing
investors to be uncertain.

49
Opportunities of HDFC
External aspects in the business environment that are likely to contribute to the success of the
company are known as opportunities. Below mentioned are the opportunities of HDFC .

 Strong Fundamentals for Growth: As HDFC Bank has better asset quality
parameters than government banks, profit growth is expected to increase .
 Increasing Corporate Banking Sector: Companies, both large and small and
medium-sized, are expanding at a rapid pace. HDFC has a good reputation for
keeping corporate salary accounts up to date.
 Efficient Debt Settlement: When compared to government banks, HDFC Bank’s bad debt
portfolio has improved and its bad debt recovery rate is high.
 Foreign Markets: Because of its strong financial position, it has very good
opportunities in foreign markets, with greater scope for acquisitions and strategic
alliances.

Threats of HDFC
External elements over which the bank has no control are referred to as threats. The company needs to
develop contingency plans for coping with them if they arise .

 Increasing NPA: The non-performing assets (NPA) of HDFC increased from 0.18 to
0.20 percent. Even though it is a minor difference, it is not a good sign for the bank’s
financial health.

 New-Age Banks: The number of non-banking financial companies and new-age

banks in India is growing.
 Lack of Growth: The HDFC is unable to increase its market share because ICICI
poses a significant threat.
 Increasing Competition: Government banks are attempting to modernize to compete with
private banks.
 Increasing Foreign Investments: The Reserve Bank of India has granted foreign
banks permission to invest up to 74 percent of their assets in the Indian market.

50
Axis Bank SWOT Analysis
Strengths of Axis Bank
 Axis Bank was ranked is the fastest growing Bank in the Private Sector. Financial
Express and KPMG have rated Axis Bank as the best bank on the basis of 26 parameters.
 Axis Bank has 4800 regional branches and 17801 ATMs.
 Banks ‘financial positions are rising at a rate of 20% last year, which is a big
positive sign for every country.
 Operating sales of 2.7 billion US dollars in 2019.
 Total assets of US$ 110 billion in 2019.
 Gross Profit Rs. 1677.90 Crores.
 Axis Bank has a strong picture of the urban population. Axis Bank is rising well in the
Indian banking sector.
 Broad array products and services are provided by the Bank.
 Decent penetration in rural areas has boosted the industry.
 One of India’s largest private-sector funding for agricultural loans is Retail Agri &
Corporate Agri.
 Great online services provided by Axis Bank, such as net banking, smartphone
phones, etc.
 Effective ads and branding have helped the brand to expand.

Weaknesses of Axis Bank

 Gaps – primarily focused on corporate banking, wholesale banking, treasury
services, retail banking.
 Global branches account for just 8 % of the total assets. The bank has recently begun
to concentrate its attention on personal banking and rural areas.
 AXIS bank’s share prices are continually fluctuating at higher margins, leaving
investors in an awkward position most of the time.
 There are a lot of efficiency differences in the financial product as well as reaching out to
the consumer.
 There are many fraudulent activities involving credit cards, as banks process the
acceptance of credit cards even without the verification of the original documents.

51
  Their financial advisors are not smart enough to direct consumers into the right
investment.
 Customer support needs to change a lot in order to contend with other big players.
 Lower branch number relative to its rivals.
 Axis Bank has minimal market share due to high competition in the banking
sector.
Opportunities of Axis Bank
 The rural market is also a major market for Axis Bank.
 Acquisitions for filling the void. Various future prospects in financial markets, such
as mutual funds, maybe exploited in the Bond Market.
 The internet banking network can be supported.
 UPI payments and mobile wallets can be promoted.
 The number of e-transactions rose from 0.7 million to about 2 million. Geographical
extension to the rural market – 80% of them do not have access to structured lending. 46
percent of them use informal lending platforms. The bank should target the rising
demand for business loans and vehicle loans. 24 percent of unregulated money lenders.
 Since it’s a new era of banking, there are a lot of opportunities to provide innovative
banking solutions techniques compared to established major players.
 The Assets of Axis Bank are rising at a much faster growth rate of 9%.
 AXIS Bank ‘s definition of ATM had a strong response in terms of attracting new
customers to the personal banking market.

Threats of Axis Bank

 RBI control of interest rates.
 Regulation of the State on the basis of pandemic circumstances.
 Foreign Investments in Banking Sector.
 Government schemes are most frequently run only by SBI, Indian Banks, Punjab
National Bank, etc.
 ICICI and HDFC are placing their aggressive marketing campaigns at significant risk in
terms of their growth in the consumer base.
 New banking license issued by Reserve Bank Of India.
 Foreign banks entering India could reduce the presence of Axis Bank.
 Competing banks are growing their operations in India.
52
SWOT Analysis of ICICI Bank
Strengths of ICICI Bank

 India’s Second Largest Bank and First Largest Private Sector Bank.
 ICICI Bank is the second-biggest bank in terms of overall assets and market share.
 ICICI Bank has a Revenue of Rs. 67803 Crores (US 9.5 Billion).
 ICICI Bank has 84922 Employees.
 ICICI’s total assets are Rs. 4062.34 billion and reported a cumulative after-tax
income of Rs. 51.51 billion, in 19 countries.
 According to financial analysts, one of the major strengths of ICICI bank is its solid
and consistent balance sheet and financial statements.
 In many banking and financial services, ICICI bank has first-mover advantage. ICICI
Bank is India’s first bank to launch full mobile banking and jewelry card solutions.
 The bank has about 2,567 branches and 8003 ATM’s in PAN India.
 ICICI Bank is India’s first bank to connect life-style benefits to banking services for
exclusive transactions and tie-ups with industry-leading brands. ICICI Bank has the
longest operating hours and additional facilities available at ATMs attracting
customers.
 ICICI’s marketing and advertisement campaigns are of decent scope compared to other
Indian banks.
 ICICI Bank Services are good.
 ICICI Bank is maintaining good Customer Relations.
 Employees of ICICI Bank show more courtesy.

Weaknesses of ICICI Bank

 Customer service for the ICICI segment is not doing well when it comes to
complaining resolution.
 Customer disputes against ICICI are high.
 The ICICI bank has the strictest debt and loan repayment programs, and interest
payments programs. They hire a third-party agency to handle the management of
recovery.
 Consumer attack and harassment issues often arise while recovery and
credit payment notices are sent well before the deadlines that bother the
customers.
 The charges for the banking operation are comparatively growing.
53
  ICICI employees are a bank in the utmost stress due to the management’s
aggressive policies to win ahead in the race. In future years this can result in
lower productivity.

Opportunities of ICICI Bank

 In the next three years, Banking Sector growth is projected to rise at a rate of 17
percent.
 In rural areas, the idea of saving in banks and investing in financial products is
growing, as more than 62 percent of India’s population is still in rural areas.
 ICICI Bank plans to open 1500 new branches over the next four years.
 Because of its financial resources, ICICI will buy small and non-performing banks.
 ICICI bank is expected to have a credit growth of 20 percent in the coming years.
 ICICI bank retains the minimum sum of unrealized assets.

Threats of ICICI Bank

 RBI allowed foreign banks to invest in Indian banking up to 74 percent.
 Banks in the government sector are pushing to modernize the capacity to
reduce customers moving to new age banks.
 HDFC is ICICI’s biggest rival, and other emerging banks such as AXIS, HSBC
place a significant threat.
 NBFC and Mobile Payment Wallets are also emerging and become competitors of
ICICI Bank.
 The micro-financing groups have a large share in rural areas.
 Though the acquisition of customers is high on one hand, the unsatisfied customers
are rising and making them turn to other banks.
 Emerging Technology is also a major threat to the Banks.
 Cryptocurrency is also a threat to banks.

54
Strengths of Kotak Mahindra Bank

1. Financial Products: Kotak Mahindra offers a vast range of financial products and services
in various domains, catering to a large pool of customers from different sectors. Some of the
most popular services offered by the bank include accounts, deposits, insurance, debit and
credit cards, housing and education loans, as well as financial and investment advice.
2. Diversified Business Model: Kotak Mahindra Bank has spread its services across
various sectors from asset management to lending to insurance to capital markets, ensuring a
steady income with low risk. A diverse business model allows it to cater to different groups
of people and provide specialized services, thereby capturing the complete value chain in
the financial sector.
3. Customer Service: Another area where Kotak Mahindra races ahead of its competitors in
customer service. It values the customer and provides various ways for them to get in touch
with the customer service, including phone banking, online chat, online help, and through
their branches and ATMs.
4. Strong Fundamentals and Management: Kotak Mahindra has excellent top-level
management who are alumni of prestigious institutions and are experienced professionals in
the banking and finance industry. This helps them steer the company in the right direction.
Kotak Mahindra’s strong fundamentals have made it a formidable force in the stock market
despite an average performance.

Weaknesses of Kotak Mahindra Bank

Weaknesses are the negative factors of any company that are holding it back from achieving
certain areas of achievement. Let’s take a look at some of the weaknesses of Kotak Mahindra
Bank:

1. Poor Marketing: Kotak Mahindra allocated a minimal portion of their budget towards
marketing and advertising. With trivial publicity, it is difficult to attract new customers since
they are not aware of Kotak’s services and incentives. This leads to a low business scope and
hinders their ability to grow.
2. Less Corporate Banking: While the bank has a significant retail base, it is lacking when
it comes to corporate customers. Compared to its peers, Kotak Mahindra has a negligible
presence in the corporate banking sector, which is a huge source of revenue.

55
3. A new enterprise: Kotak being a new enterprise which started in 2003, people trust
them less in comparison to other banks.
4. Less corporate banking: Kotak Mahindra has comparatively less corporate banking
than other banks.
Opportunities of Kotak Mahindra Bank

Opportunities are the favourable external factors of the company that gives it a competitive
advantage over other companies. Let’s take a look at some of the opportunities present for
Kotak Mahindra Bank:

1. Presence in Asset Management: Kotak Mahindra Bank’s presence in the asset

management sector allows it to cater to corporates and MNCs. There is an opportunity for the
bank to grow and dominate the corporate space.
2. Increase in banking demand: With the technological and financial boom in the country,
there is a high demand for quality and affordable banking services. Kotak Mahindra Bank can
appeal to this crowd by curating specialized services for them.
3. Overseas Expansion: Kotak Mahindra Bank can cater to international clients and
corporates as well by expanding its services internationally. This will help map the bank
on the global map as well as bring in customers from all over the globe, increasing revenue
in the process.
4. RBI Act: The recent changes by RBI helped Kotak to improve its CASA ratio, which
can eventually attract more people

Threats of Kotak Mahindra Bank

1. Increasing competition in the Finance Sector: The finance sector is populated with
companies having enormous capital, providing a vast array of services and catering to
customers from nearly all domains, sectors, and regions. The vast distribution network
allows banks to reach every nook and cranny of the country, thereby further increasing the
competition. The fierce competition means Kotak Mahindra Bank has to quote i’s products
and services at a price lower than customers. They also need to constantly come up with
innovative and unique ideas to market their services, as well as allocate a large portion of
their budget towards marketing and advertising.
56
2. Economic Slowdown: With the pandemic and dollar index affecting the Indian economy,
the banking and finance sector seems to have borne the brunt of the slowdown, making it
harder for Kotak Mahindra bank to retain customers and assets, as well as gain new
customers.

3. Competition in financial services: Due to many new competitors entering the market of
financial services, it becomes difficult for Kotak to compete and maintain the market share
and its profits

57
Strengths of IndusInd Bank
Strengths describe that in which place an organization is unbeatable and what detaches it
from the competition. The following are the strengths of IndusInd Bank:

 A Strong Brand: The biggest factor which determines a brand’s recognition is its
brand presence. Operating since 1994, IndusInd’s customer recognition and brand
value is their biggest strength to be a leader in the particular field.
 Diversified Business: IndusInd works in many sectors such as Commercial Banking,
Financial Marketing, Retail Banking, Corporate Finance, etc.

(IndusInd Bank Launches Digital Lending Platform, Source: ANI News)

 Strong Marketing Strategies: IndusInd comes up with many ad campaigns to spread
awareness about the threats in print media and many news channels. Its digital
presence among many social media handles such as Facebook, Instagram, Twitter &
YouTube with the involvement of digital marketing also helps a particular brand to
grow.
Bonus Tip: IndusInd Bank offers online services like UPI app for easing the transaction
process, net banking services and digital online processes for easy credit. Digitalisation has
benefited customers with a cashless and hassle-free experience while banking. So, isn’t
investing in learning digital marketing skills worth the investment? If you think yes, then
there are several short-term courses in IIDE that will help you learn about digital marketing
and how to leverage its power to grow.

 Privacy Safety: One of the biggest factors depending upon the customer to choose a
particular bank is their data safety. IndusInd always takes care of their customers’
safety.
 High-End Technology: To ensure the seamless working of its banking services,
IndusInd always relies on advanced technology.

Weaknesses of IndusInd Bank

 Use of Digital in Rural Area: The use of the digital mode of banking and other
finance-related works is not known by many rural peoples.

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  Lagging Behind Many Banks in Capital Structure: Though IndusInd is one of the
largest banks in the country, its competitors are moving forward than IndusInd in
terms of capital structure.
 Few No. of Branches as Compared with the Leading Banks: Many of the leading
competitors of IndusInd are expanding rapidly to capture more of the market cap but
in terms of expansion, IndusInd is working slowly.

Opportunities for IndusInd Bank

Opportunities are complimentary external factors that could give an organization a keen
advantage. The opportunities for IndusInd Bank are:

 Expansion into Rural Areas: IndusInd Bank can expand to rural areas to capture
more markets. Expanding in the rural areas will also help them to bank the unbanked
and underbanked.
 Aggressive Marketing: One of the biggest opportunities for each brand nowadays is
their marketing techniques.
 Global Presence: Many of IndusInd’s competitors are expanding globally. To
increase their customers globally, it’s the best chance for IndusInd to expand their
market.

Threats to IndusInd Bank

Threats are the factors that have the potential to harm the company’s growth. Some of the
Threats to IndusInd Bank are:

 Change in Laws and Regulations: When the government changes laws and
regulations, it might have an impact on the bank’s business operations.
 Global Competitors: There are many global giants in the banking and finance sectors
and it poses a threat to IndusInd bank to be competitive in the banking industry.
 Security Threats: If a bank encounters any security difficulties such as cyber-
attacks which can cause substantial financial losses for the customers as well as
banks. In such circumstances, regaining customers’ confidence becomes challenging.

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 CHAPTER - 5

FINDINGS

 The HDFC Bank’s current ROCE is little better than the other banks as well the
Indusind bank and the Kotak Mahindra bank is little closer to the HDFC bank but the
ICICI bank is little lower and the AXIS bank is the lowest. so, it is very clear that
HDFC bank along with the Indusind bank and the Kotak Mahindra bank stands better.

 HDFC bank also stands the best here as well and we can also see that the Kotak
Mahindra bank’s Net Profit Margin have decreased a lot in the past but even it is one
in the top and all the other three have never crossed the Net Profit Margin of HDFC
and Kotak Mahindra bank.

 The operating profit of the HDFC Bank is at the top and the ICICI Bank’s operating
profit have decreased a lot over the period as well the AXIS Bank and the Indusind
Bank have not been much impressive but the Kotak Mahindra Bank was been little
high but not much as HDFC bank.

 The Return on Assets of HDFC Bank is been consistently high and Kotak Mahindra
Bank is little below but has a sturdy Return on Assets. Over the time the return on
Assets of Indusind bank have grownup toward the HDFC Bank. The AXIS Bank was
been near the bottom line. The ICICI Bank have faced as deflation in past and now it
is getting better.

 The HDFC Bank stands at the top of all the banks and the second place is getting hold by the
Indusind Bank with have increased really in good way. Kotak Mahindra Bank stays in
middle for a long period. The ICICI Bank have got a good recovery and the AXIS Banks was
been at the least and inconsistent

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.
 The cost of Income of the HDFC Bank, Indusind Bank and the Kotak Mahindra Bank
was been more or less the same as the Cost of Income of the AXIS Bank is the highest
of all and the ICICI Bank comes the second which is little low but high then the all
the other three.

 The HDFC Bank Stands along with the Indusind Bank and Kotak Mahindra Bank.
The Lowest is ICICI Bank and the second Lowest is the AXIS Bank.

 The ICICI Bank stands at the top and HDFC Bank stands at second. Then AXIS Bank
stays in between and Kotak Mahindra Bank is at the fourth place and last comes the
Indusind Bank.

 The HDFC Bank stands at the top and then follows the Kotak Mahindra Bank, and the
only are the banks which stays above the line. And all the three stands the below the
line where the AXIS Bank and the ICICI Bank at most equal and the Indusind Bank
Stands little higher than the two Banks.

 The expenses of ICICI Bank are low than the other bank whereas the expenses of the
Indusind Bank is the highest. The expenses of the HDFC Bank is moderate whereas
the expenses of Kotak Mahindra Bank is little high as Indusind Bank and the AXIS
Bank stays between HDFC Bank and ICICI Bank.

 The interest expenses of Indusind Bank are very high than the other bank and all other
bank’s Interest expenses are more are less equal. The interest expenses of the Kotak
Mahindra bank are the lowest. The interest expenses of the HDFC Bank and ICICI
bank are more or less the same.

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SUGGISIONS

 From the project research it is clear that investing in the HDFC Bank stock can
yield high profit than the others.
 As well the stocks like ICICI bank and Kotak Mahindra Bank are highly
reliable and also provide good profit.
 The Banks like Axis and Indusind are stocks which have a good performance
as will little risky, but in a longer run it can also make good profits.

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 CONCLUSION

From the project it is very clear that Investing in the HDFC Bank is highly preferable
and also the banks like ICICI and Kotak Mahindra are also doing a good turn over in the
recent past. On the whole investors can buy Bank Nifty stocks rather than the IT Nifty stocks
or Sugar Nifty stocks for the high reliability they provide. Not only for the reliability they
provide but also for the profit they make, so I would conclude by saying that rather
depositing cask in bank invest it in Bank Stocks.

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 KEY PERFORMANCE RATIOS OF HDFC BANK FOR LAST FIVE YEARS

Key performance 2021-2022 2020-2021 2019-2020 2018-2019 2017-2018

ratio
ROCE (%) 3.42 3.33 3.34 3.20 3.18
CASA (%) 46.11 42.23 42.37 43.49 48.03
NET PROFIT 25.74 22.86 21.29 21.79 20.99
MARGIN (%)
OPERATING 4.89 2.60 3.48 2.82 3.25
PROFIT MARGIN
(%)
RETURN ON 1.78 1.71 1.69 1.64 1.68
ASSETS (%)
RETURN ON 15.27 15.35 14.12 16.45 16.26
EQUITY (%)
NET INTERREST 3.71 3.67 3.87 3.76 3.83
MARGIN (%)
COST OF INCOME 40.37 38.52 38.41 39.62 37.84
INTEREST 6.91 7.50 7.95 7.54 8.02
INCOME/TOTAL
ASSETS (%)
NON-INTEREST 1.44 1.51 1.41 1.43 1.42
INCOME/TOTAL
ASSETS (%)
OPERATING 0.33 0.19 0.27 0.21 0.26
PROFIT/TOTAL
ASSETS (%)
OPERATING 1.87 2.00 2.09 2.13 2.28
EXPENSES/TOTAL
ASSETS (%)
INTEREST 3.20 3.83 4.07 3.77 4.18
EXPENSES/TOTAL
ASSETS (%)

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 KEY PERFORMANCE RATIOS OF ICICI BANK FOR LAST FIVE YEARS

Key performance 2021-2022 2020-2021 2019-2020 2018-2019 2017-2018

ratio
ROCE (%) 3.10 2.67 2.52 2.91 3.59
CASA (%) 46.28 45.11 49.61 51.68 50.36
NET PROFIT 20.46 10.60 5.30 12.33 18.09
MARGIN (%)
OPERATING -3.50 -11.38 -17.58 -19.36 -17.91
PROFIT MARGIN
(%)
RETURN ON 1.31 0.72 0.34 0.77 1.26
ASSETS (%)
RETURN ON 11.21 6.99 3.19 6.63 10.11
EQUITY (%)
NET INTERREST 3.16 3.02 2.80 2.61 2.81
MARGIN (X)
COST OF INCOME 42.57 45.79 48.98 46.51 42.68
INTEREST 6.43 6.80 6.57 6.25 7.01
INCOME/TOTAL
ASSETS (%)
NON-INTEREST 1.54 1.49 1.50 1.98 2.52
INCOME/TOTAL
ASSETS (%)
OPERATING -0.22 -0.77 -1.15 -1.21 -1.25
PROFIT/TOTAL
ASSETS (%)
OPERATING 1.75 1.96 1.87 1.78 1.91
EXPENSES/TOTAL
ASSETS (%)
INTEREST 3.26 3.78 3.77 3.63 4.20
EXPENSES/TOTAL
ASSETS (%)

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KEY PERFORMANCE RATIOS OF KOTAK MAHINDRA BANK FOR LAST FIVE
YEARS

Key performance 2021-2022 2020-2021 2019-2020 2018-2019 2017-2018

ratio
ROCE (%) 3.32 2.86 2.77 2.80 2.90
CASA (%) 60.44 56.16 52.49 50.75 43.99
NET PROFIT 25.94 22.08 20.32 20.68 19.27
MARGIN (%)
OPERATING 5.60 2.13 1.09 0.16 -0.37
PROFIT MARGIN
(%)
RETURN ON 1.81 1.65 1.55 1.54 1.58
ASSETS (%)
RETURN ON 11.01 12.25 11.47 10.89 12.35
EQUITY (%)
NET INTERREST 4.00 3.74 3.60 3.59 3.78
MARGIN (X)
COST OF INCOME 42.83 40.01 38.52 39.91 38.68
INTEREST 6.99 7.47 7.66 7.45 8.24
INCOME/TOTAL
ASSETS (%)
NON-INTEREST 1.42 1.49 1.47 1.52 1.62
INCOME/TOTAL
ASSETS (%)
OPERATING 0.39 0.15 0.08 0.01 -0.03
PROFIT/TOTAL
ASSETS (%)
OPERATING 2.23 2.45 2.40 2.42 2.61
EXPENSES/TOTAL
ASSETS (%)
INTEREST 2.99 3.72 4.06 3.85 4.46
EXPENSES/TOTAL
ASSETS (%)

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 KEY PERFORMANCE RATIOS OF AXIS BANK FOR LAST FIVE YEARS

Key performance 2021-2022 2020-2021 2019-2020 2018-2019 2017-2018

ratio
ROCE (%) 2.70 2.68 2.47 2.34 3.05
CASA (%) 44.92 41.19 44.37 53.75 51.41
NET PROFIT 10.35 2.59 8.50 0.60 8.26
MARGIN (%)
OPERATING -12.96 -22.20 -15.37 -23.35 -17.98
PROFIT MARGIN
(%)
RETURN ON 0.66 0.17 0.58 0.03 0.61
ASSETS (%)
RETURN ON 6.48 1.91 7.01 0.43 6.59
EQUITY (%)
NET INTERREST 2.93 2.75 2.71 2.69 3.00
MARGIN (X)
COST OF INCOME 47.76 50.03 44.28 51.64 46.42
INTEREST 6.38 6.84 6.86 6.62 7.40
INCOME/TOTAL
ASSETS (%)
NON-INTEREST 1.48 1.69 1.63 1.58 1.94
INCOME/TOTAL
ASSETS (%)
OPERATING -0.82 -1.51 -1.05 -1.54 -1.33
PROFIT/TOTAL
ASSETS (%)
OPERATING 1.84 1.89 1.97 2.02 2.02
EXPENSES/TOTAL
ASSETS (%)
INTEREST 3.45 4.08 4.15 3.92 4.39
EXPENSES/TOTAL
ASSETS (%)

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KEY PERFORMANCE RATIOS OF INDUSIND BANK FOR LAST FIVE YEARS

Key performance 2021-2022 2020-2021 2019-2020 2018-2019 2017-2018

ratio
ROCE (%) 3.34 3.62 3.00 3.11 3.21
CASA (%) 41.81 40.37 43.14 44.00 36.85
NET PROFIT 9.78 15.34 14.82 20.86 19.90
MARGIN (%)
OPERATING -12.83 -8.80 -10.53 -6.62 -9.04
PROFIT MARGIN
(%)
RETURN ON 0.78 1.43 1.18 1.62 1.60
ASSETS (%)
RETURN ON 6.58 12.84 12.52 15.35 14.14
EQUITY (%)
NET INTERREST 3.72 3.92 3.18 3.38 3.39
MARGIN (X)
COST OF INCOME 48.51 40.83 40.10 39.22 39.65
INTEREST 7.98 9.37 8.01 7.79 8.06
INCOME/TOTAL
ASSETS (%)
NON-INTEREST 1.80 2.26 2.03 2.14 2.33
INCOME/TOTAL
ASSETS (%)
OPERATING -1.02 -0.82 -0.84 -0.51 -0.72
PROFIT/TOTAL
ASSETS (%)
OPERATING 2.30 2.68 2.30 2.52 2.67
EXPENSES/TOTAL
ASSETS (%)
INTEREST 4.26 5.44 4.82 4.41 4.67
EXPENSES/TOTAL
ASSETS (%)

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