Edelweiss is bullish on CARE Ratings has recommended buy rating on the stock with a target price of Rs 1722 in its research report dated October 04, 2017.
Edelweiss' research report on CARE Ratings
We met Mr. Rajesh Mokashi, CEO & MD, CARE Ratings (CARE), to get an insight into the company’s growth strategy as well as industry dynamics. Mr. Mokashi is optimistic on recent reforms—IBC, dual ratings for commercial papers (CPs)—and perceives them as additional growth levers. Further, CARE envisages strong potential in non‐rating avenues, which it is planning to tap via investment in subsidiary CARE Advisory Research and Training (CART). CARE has set revenue target of INR5bn in 4 years, implying 15% CAGR. Management reiterated maintaining integrity and strong customer relationships as top priorities to enhance branding. On anticipated uptick in the corporate bond market, improving macroeconomic outlook and government initiatives (eg. high exposure framework) boost, we forecast 12% sales CAGR over FY17‐19. Maintain ‘BUY’ with DCF‐based TP of INR1,722.Outlook
On improving macroeconomic and credit environment we estimate CARE to clock 12% sales CAGR over FY17‐19. We maintain ‘BUY’ with DCF‐based TP of INR1,722. The stock is currently trading at 24x FY19E P/E versus 37x for ICRA and 30x for CRISIL.
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