ICRA - Falling top-line with rising cost weigh on margins - Emkay

- ICRA's Q1FY13 results were below expectations with Adj operating revenue [ex BPA Technologies (BPA Tech)] at Rs450mn and adj net profit at Rs105mn.

- Rating revenue declined 36%qoq (16.5%yoy) primarily led by sluggish debt market activity and lower credit growth in the system.

- OPMs fell to the lowest ever in Q1 at 19% led by 1) Sharp fall @36%qoq in ratings revenue 2) 21.3 %yoy increase in opex (ex BPA Tech) 3) higher opex in BPA Tech (acquired in Q1).

- Reduced traction in rating business with rising cost pressures to keep the upside capped. Downgrade to HOLD with limited room for upside.

Source : Equity Bulls

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