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Research
CRISIL - 3QCY2012 Result Update - Angel Broking
Posted On : 2012-10-21 13:04:59( TIMEZONE : IST )
For 3QCY2012, CRISIL's net sales grew by 23.1% yoy to Rs.271cr. The company reported a 446bp yoy contraction in its OPM to 33.7%. The net profit declined by 0.7% yoy to Rs.60cr. We continue to remain Neutral on the stock.
Top-line posts mediocre growth, EBITDA margin contracts: For 3QCY2012, CRISIL's top line reported a 23.1% yoy growth to Rs.271cr. Its rating segment witnessed a 22.6% yoy growth to Rs.103cr, backed by decent growth in the bank loan rating segment. The research segment growth picked up during 3QCY2012, registering a 37.6% yoy growth to Rs.152cr (10.2% yoy in 2QCY2012). The advisory segment performance remained sluggish growing by 3.3% yoy(de-growth of 21.6% yoy in 2QCY2012) to Rs.15cr. Going ahead, Coalition Development Ltd will drive the next leg of growth for CRISIL. For 3QCY2012, the EBITDA declined by 8.7% yoy to Rs.91cr on the back of margin contraction. The EBITDA margin contracted by 446bp yoy to 33.7%, largely due to higher staff cost, which increased to 44.5% of sales in 3QCY2012 from 40.5% of sales in 3QCY2011 and forex loss of Rs.7cr in 3QCY2012 as against profit of Rs.9cr in 3QCY2011. The net profit came in at Rs.60cr, down 0.7% yoy; while margin contracted by 531bp yoy to 22.0%, largely due to increased tax rate. CRISIL's tax rate increased to 29.9% of PBT in 3QCY2012 vs 26.0% of PBT in 3QCY2011. The company reported other income of Rs.3cr during the quarter as compared to Rs.5cr reported in 3QCY2012.
Outlook and valuation: In June 2012, CRISIL signed an agreement to buy 100% of equity shares of the UK-headquartered Coalition Development along with its subsidiaries, which we expect would drive the next leg of growth for CRISIL. Accounting for Coalition Development's revenue, we expect CRISIL to post a 20.6% CAGR in revenue and 14.5% CAGR in PAT over CY2011-13 and continue to maintain its leadership position. Despite the recent buy back, the stock is available at a rich valuation of 24.4x CY2013E earnings, which is at the higher end of its historical range of 13.4x-26.9x and five-year median of 19.4x one-year forward EPS. We continue to maintain our Neutral recommendation on the stock.
