Buy CRISIL; target of Rs 4100: YES Securities

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26 Aug, 2025 12:21

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YES Securities' research report on CRISIL

CRISIL delivered a robust operating performance in Q1 CY22 (4% Revenue/16-17% EBITDA & Earnings beat) characterized by multi-year high revenue growth of 20% yoy and EBITDA margin of 29.6%. The strong growth performance was driven by a) improved growth momentum in domestic ratings business (continuous market share gains), b) sustained traction in GR&RS business underpinned by strong demand for core offerings in research, risk, regulatory support, and transformation, capabilities to tap new opportunities and new client additions, c) strong performance of India Research business on continued buoyancy in capital markets and economic recovery and d) an integrated approach in GBA business driving wallet share gains within key clients and new client additions. Management remains sanguine about growth momentum in global research/benchmarking analytics businesses and about market share in the domestic ratings business.

Outlook

We estimate 15%/23% consolidated revenue/PBT CAGR over CY21-24 and ~400 bps margin expansion through the period. Improved margin and growth will cause RoE to expand by 6 ppt to 38% in CY24. Stock trades at 41x 1-yr rolling fwd. P/E, and its peak valuation has been around 55x in the past seven years. Multiple is expected to re-rate on prospects of substantial RoE expansion. Reiterate BUY and raise 12m PT to Rs4100 (earlier Rs3750).

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