Angel Broking neutral on CRISIL

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Angel Broking neutral on CRISIL

Angel Broking has maintained neutral rating on CRISIL, in its July 21, 2011 research report.

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Angel Broking has maintained neutral rating on CRISIL , in its July 21, 2011 research report.

"CRISIL registered strong top-line growth in 2QCY2011. The company's net sales grew by 34.8% yoy to `204cr. The company reported a 127bp yoy contraction in OPM to 29.7%. Net profit increased by 33.4% yoy to `44cr (`37cr)."

"For 2QCY2011, CRISIL's top line reported 34.8% yoy growth to `204cr (`151cr), led by strong growth in its research segment, which witnessed 54.4% growth because of addition of Pipal's revenue for the full quarter and strong growth in Irevna and CRISIL Research. The rating business also picked up during the quarter, registering strong 19.2% yoy and 17.1 qoq growth. The advisory segment also witnessed an increase in its revenue, registering 20.2% yoy and 46.6% qoq growth. The company's EBITDA margin declined by 127bp yoy, largely due to higher employee cost, which increased to 45.6% of sales from 43.0% of sales. Net profit came in at `44cr, up 33.4% yoy. However, adjusting for other income, net profit increased by 31.7% as the company had sold property worth `3.32cr in 2QCY2011."

"We expect CRISIL to post a 21% CAGR in revenue over CY2010-12 and continue to maintain its leadership position. CRISIL benefits from its asset-light business model, which is high on intellectual assets (employee costto- sales is around 40%). Further, the company is debt free and has 40% plus RoE. Additionally, CRISIL enjoys strong parentage (Standard and Poor's). Currently, the stock is available at 22.9x CY2012E earnings, which is at the higher end of its historical range of 16.4-29.9x one-year forward EPS. With the recent run-up in the stock price, we change our recommendation to Neutral," says Angel Broking research report.

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To read the full report click on the attachment