Axis Direct's research report on CARE
CARE’s net profit for the quarter grew by 68% YoY (4% QoQ) to Rs 45 cr on account of strong growth of 186 % QoQ in Other income (primarily investment income) due to profits booked on maturity of certain investments made for a longer tenure. Rating income grew by 5% YoY in Q3 FY17 on account of an increase in both the volume of fresh debt rated and surveillance exercises.
OutlookOther Income adversely impacted the earnings of CARE earlier, while with maturity of long term investments other income started improving. Considering the economic recovery and improvement in credit growth, we are positive on the rating business of CARE. We value CARE at a PE of 28x FY18E EPS of Rs 56 to arrive at a valuation of Rs 1558 per share. We reiterate our BUY rating on the stock.
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