CARE Ratings Ltd announces Financial Results for Q1 FY22

The Board of Directors of CARE Ratings approved the financial results for Q1 FY22 in the Board meeting held on Tuesday the 3rd of August 2021.

Consolidated results

CARE Ratings consolidated total income increased by 20.54% from Rs. 46.89 crore in Q1 FY21 to Rs 56.52 crore in Q1 FY22. Total expenses have Increased by 23.13 % during this period. Operating profit increased by 71.09% from Rs.5.05 crore to Rs.8.64 crore. Net profit increased from Rs.9.70 crore to Rs.11.55 crore, an increase of 19.07%.

The consolidated financials include those of CARE Ratings and its four subsidiaries.

Standalone results

CARE Ratings standalone total income increased by 16.31% from Rs.42.49 crore in Q1 FY21 to Rs. 49.42 crore in Q1 FY22. Total expenses have increased by 21.07% during this period. Operating profit increased by 44.81% from Rs.4.91 crore to Rs 7.11 crore. Net profit increased from Rs.9.93 crore to Rs.10.89 crore.

Operating profit margin and net profit margin were 17% and 22% respectively in Q1 FY22.

The first quarter of the year started with lockdowns being imposed by several states sequentially over the first two months which restricted consumption activity. This has been reflected in the lower PMI indices for manufacturing and services this quarter. Overall bond market activity was subdued with total issuances being Rs 0.88 lakh crore as against Rs 2.22 lakh crore during the same period of last year. In 2020, the RBI had announced a series of LTRO and TLTRO operations which helped the corporate bond market. This year, while there have been announcements made for special LTROs for small finance banks the response has been limited.

Bank credit growth has been in the negative zone with degrowth of 1% on top of -1.2% last year. On a sector-wise basis for the first quarter of the year, there was a fall in growth in credit by 1.7% for industry and 1.1% for services. Growth in outstanding CPs was lower at 3.2% this quarter against 13.6% in 2020.

Therefore, the overall environment in the credit and debt markets was subdued amid lockdown conditions which affected real sector activity. All this affected investment activity in the economy which had a bearing on the credit rating industry.

Our subsidiary companies have witnessed growth of 70% in total income with net profit/(loss) improving from Rs (0.33 crore) to Rs 1.09 crore. This was supported by a significant contribution from CARE Ratings (Africa) Private Limited and CARE Ratings Nepal Limited.

The company has persevered with its outreach effort during this period. This was in terms of holding webinars on various subjects as well as bringing out thematic reports on different industries as well as economy to share our views on these subjects. With the lockdown being widespread the company had once again brought in the 'work-fromhome' model which worked quite seamlessly.

'The nature of our business is such that the first quarter is normally a slow-start as companies realign their strategies with the environment and bring out their audited results which are analyzed by us. We do see a lot of pipeline work which should materialize in the coming quarters especially on surveillance", said Ajay Mahajan, MD & CEO of CARE Ratings. 'We are focussing on garnering new business for the initial ratings piece which admittedly will improve as the economy recovers and grows. However, in keeping with our broader goal of diversification and growing other businesses we are looking at our domestic subsidiaries to pick up momentum in the coming months' he added.

Shares of CARE Ratings Limited was last trading in BSE at Rs. 764.15 as compared to the previous close of Rs. 769.15. The total number of shares traded during the day was 48052 in over 3336 trades.

The stock hit an intraday high of Rs. 783.25 and intraday low of 758.5. The net turnover during the day was Rs. 37090346.

Source : Equity Bulls

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