Crisil Growth Rate

India Midcaps

RESULT UPDATE

CRISIL

All round strong performance

India Equity Research| Credit Rating

EDELWEISS RATINGS Absolute Rating Investment Characteristics HOLD Growth

CRISIL’s Q1CY14 top line at 21% YoY and PAT at 39% YoY surpassed our estimates by 8% and 15%, respectively. Key positives were: (1) ratings segment revenue rebounded with 16% YoY growth and research revenue surged 26% YoY; (2) overall EBIDTA grew 35% YoY; and (3) ratings EBIT margin grew a robust 174bps alongwith 400bps expansion in research EBIT margin to 30%, which led to overall EBITDA margin catapulting 322bps to 33.2%. Led by strong performance in ratings and research, we are revising our CY14E and CY15E earnings up 4.0% and 6.5% to ~14.3% and ~18.3% growth, respectively. However, we maintain ‘HOLD’ on rich valuations.

MARKET DATA (R: CRSL.BO, B: CRISIL IN) CMP Target Price 52-week range (INR) Share in issue (mn) M cap (INR bn/USD mn) : INR 1,246 : INR 1,347 : 1,289 / 884 : 70.7 : 88 / 1,460

Avg. Daily Vol. BSE/NSE (‘000) : 46.4

Strong rebound in ratings, uptick in research

CRISIL reported a better-than-expected Q1CY14 with revenue growth of 21% YoY led by 16% YoY surge in ratings and 26% YoY rise in research segment. Ratings segment grew 5% QoQ led by pick up in bank loan ratings and SME ratings segment. Favourable client additions in financial research, analytics & model validation, strong performance by Coalition and launch of new products and services led to strong growth in research segment. Advisory segment also rebounded with 11% YoY growth as CRISIL won its largest mandates and built a strong order book.

SHARE HOLDING PATTERN (%) Current Promoters * MF's, FI's & BKs FII's Others 67.7 10.4 8.0 13.9 Q2FY14 67.8 10.2 8.3 13.7

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Q1FY14 52.8 16.1 10.4 20.7

NIL

Robust ratings and research spurs EBIT margin

The company’s operating profit jumped 35% YoY due to 21% growth in ratings EBIT, 45.5% surge in research EBIT and 3.4% rise in advisory EBIT. Ratings...