Buy CRISIL; target of Rs 2241: Axis Direct

Axis Direct's research report on CRISIL

Revenue at ~Rs 4.4 bn grew 3% YoY in Q4 (CY17 at ~7%). Rating revenue declined ~2% YoY due to muted BLR and SME segment. Negative operating leverage (employee costs and profession fee) led to margin decline of ~300 bps in Q4. Lower depreciation and tax burden led to PAT growth of 5% YoY. CRISIL declared dividend of Rs 10 in Q4 (Rs 28 in CY17) indicating a payout of ~65% (65% in CY16/ 57% in CY15).

Outlook

We expect 13-14% revenue CAGR over next 3-5 years, RoCE at 50%, and most of FCF to be distributed back to shareholders (dividends + buybacks). Maintain BUY. For all recommendations report, click here

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