ICRA - Q1 FY22 first cut: Strong performance from the Outsourcing segment - YES Securities

Overall performance:

- Consolidated revenues at Rs799mn was ahead of estimates with a slight beat (1%) in ratings business and a huge beat of 15% in outsourcing revenues. Revenue growth was at 14.7% yoy but dipped 2.7% qoq.

- EBIDTA at Rs247mn was significantly ahead of forecasts and so was the margin at 30.9%. EBIDTA jumped 65.9% yoy and Margins jumped 953bps yoy.

- PAT was at Rs243mn a growth of 43% yoy and 8% qoq.

Ratings business:

- Ratings segment revenues at Rs480mn was better than our forecasts of Rs473mn and saw a growth of 9.6% yoy but a decline of 4.5% qoq.

- This performance was better than that of the market leader which saw a decline of 5% in overall ratings revenue (possibly more in domestic ratings).

- ICRA's performance is coming from a low base wherein during Q1 FY21 it witnessed a decline of 17% (Crisil saw a 10% growth), indicating reversal of market share loss.

- Segment margins were at 21.7% an increase of 1090bps yoy but a sharp 832bps qoq decline.

Outsourcing business:

- Strong performance with a revenue growth of 28.9% yoy (15% beat in comparison to our estimates) due to increase in business from existing and new clients.

- Margins at 46.1% were the highest ever and saw a surge of 789bps yoy at 46.1%.

- Change in estimates: Q1 FY22 profit accounts for 30% of our full year estimates.

- Valuations: The stock currently trades at FY23E P/E of 38.7x.

Shares of ICRA LTD. was last trading in BSE at Rs. 3748 as compared to the previous close of Rs. 3748.4. The total number of shares traded during the day was 369 in over 198 trades.

The stock hit an intraday high of Rs. 3823.2 and intraday low of 3680.95. The net turnover during the day was Rs. 1385039.

Source : Equity Bulls

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