ICICI Direct's reserach report on CAREReported rating revenues were at | 77.7 crore vs. | 82.9 crore expected. Traction was lower at 5% YoY compared to higher traction seen in Q1FY16. On a QoQ basis, traction was higher at 62% owing to large part of surveillance fee income being booked in Q2 Lower-than-expected revenue traction can be attributed to lower traction in the bank loan rating segment owing to subdued banking system credit growth. Further, stagnation in SME rating revenues continued due to MSME ministry lowering budgetary allocation for subsidising rating fees of SMEs Other income was muted at | 2.2 crore due to lower investible surplus and also most investments in FMPs are for a tenure of three years, income on which will be booked on maturity EBITDA came in at | 55.7 crore while the EBIDTA margin was at 71.3%. PAT was at | 37.9 crore (down 28% YoY) vs. | 42.6 crore estimated. It declared interim dividend of | 6 per shareCARE emerged as a strong player in rating business with strong margins and improving market share with best brand recall after Crisil. The company has strong RoE of 39% for FY15, which is expected to be maintained by FY17E. We have lowered our EPS estimates over FY16 & FY17E by ~3% as we cut our rating revenues estimates and factored in lower other income. However, we are structurally positive on the rating business in next three to five years. We maintain target multiple of 30x FY17E EPS but reduce TP to | 1700 and maintain BUY. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
