We had recommended CRISIL in issue no. 18 dated August 21, 2016, under the ‘Choice Scrip’ section when the scrip was trading at ₹2098. Our recommendation was based on the company’s significant traction in industry in near term during the time of recommendation, consistent strong financials and a diversified segment.
CRISIL is one of the leading rating agencies in India. Operating in the segments of ratings, research and advisory, the company provides ratings, data, research, analytics and solutions, besides conducting infrastructure advisory and risk solutions through its subsidiary. On the financial front, CRISIL posted 7.44 per cent rise in its revenue from ₹271.34 crore in Q1FY17 to ₹291.54 crore in Q1FY18. The company’s profit before interest, depreciation and tax (PBIDT) stood at ₹ 76.42 crore in Q1FY18, up by
7.63 per cent on a YOY basis. The profit after tax of the company stood at ₹55.42 crore, an increase of 15.17 per cent in the first quarter of FY18 on a yearly basis.
On an annual basis, the company’s revenue increased 18.15 per cent to ₹1,129.59 crore in FY17 from ₹956.10 crore in FY16. The company’s PBIDT stood at ₹367.07 crore in FY17, up by 20.54 per cent as against the PBIDT in FY16. The company’s profit after tax stood at ₹255.66 crore, up by 15.16 per cent in FY17 from ₹222.01 crore in FY16. On the valuation front, the share price of CRISIL is trading at a PE of 51.28x as against its peers such as Care Ratings (31.24x) and ICRA (46.1x), whereas the industry PE stood at 44.25x.
After our recommendation, the share price of CRISIL dropped by about 14 per cent. The stock is on a downward trend, hence we had recommend investors to EXIT.