Hold CRISIL; target of Rs 7700: Emkay

6115 Investors following CRISIL. Share this News with them.

0

Like this story, share it with millions of investors on M3

Hold CRISIL; target of Rs 7700: Emkay

Emkay Global Financial Services has recommended hold rating on CRISIL with a target of Rs 7700, in its July 21, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Hold Wipro; target of Rs 441: KRChoksey Hold Dish TV; target of Rs 99: KRChoksey Buy Greenply Industries; target of Rs 326: Angel Broking ALSO READ See previous views by Emkay Global Financial Services See what other Experts & Brokerages are saying about CRISIL See messages about CRISIL CRISIL BSE | NSE 01/06/12 Are Mutual Funds betting on CRISIL?

Emkay Global Financial Services has recommended hold rating on CRISIL with a target of Rs 7700, in its July 21, 2011 research report.

"CRISIL reported revenue growth of 34.8%yoy significantly ahead of our expectation led by higher than expected growth in rating and advisory business. Rating business reported growth of 19.2%yoy (17.2%qoq) to Rs846mn, while advisory revenue grew by equally strong 20.2%yoy (46.6%qoq) to Rs157mn. Moreover research revenues also grew by a healthy 54.4%yoy (9.6% (qoq) on expected lines."

"We expect the momentum in the revenue growth to sustain in coming quarters driven by research over CY11E/CY12E. The number of full time equivalents (FTE) has seen strong growth during the quarter and the new hiring has also been strong. Same coupled with the acquisition of Pipal research will further add to the growth trajectory in research segment in CY11/12. We believe that strong growth in research will more than compensate any slow down in the rating revenues. The high revenue growth for the quarter was partially offset by higher employee expenses and consequent margin contraction. The employee expenses increased by 18.9%qoq to Rs930mn as the company hired aggressively during the quarter. As a result the operating margins contracted by 192bps yoy to 29.5% and the operating profit growth was relatively lower (but still strong) at 26.1%. As the company hired aggressively in research during the quarter, the operating margins in research segment contracted by 683bps qoq to 24.7%. However we believe as the company leverages on pipal business, the margins will come back to normal levels going forward."

"We have always been saying that the diversified revenue stream and gradual normalization of the global financial markets give CRISIL an edge in the event of slow down in the domestic business and current quarterly numbers prove the same. At the CMP, the stock is quoting at 23.8x/18.8x CY11E/12E EPS. We maintain HOLD rating with TP of Rs 7700," says Emkay Global Financial Services research report.

See which stocks Mutual Funds/UTI have bought in last quarter?

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment