Sell CRISIL; target of Rs 1,491: Edelweiss

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26 Aug, 2025 12:21

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Edelweiss's report on CRISILCRISIL’s Q3CY15 top line (up 14.6% YoY) and EBITDA (up 13.1% YoY) surpassed our estimates 5% and 6%, respectively. Key positives were: (1) 23.9% YoY and 15% YoY surge in 9mCY15 in research revenue; and (2) robust 540bps EBIT margin expansion in research segment to 33.8%. Key negatives were: (1) 0.2% YoY dip in ratings business leading to decline of 4.3% YoY for 9mCY15; and (2) 98bps YoY dip in ratings EBIT margin to 35.3% leading to overall 38bps YoY drop in EBIDTA margin to 29.1%.Based on our SoTP valuation, post assigning premium valuation of 25x CY16E EPS to the research segment, the derived valuation of ratings at CMP is at 63x CY16E EPS. Maintain ‘REDUCE’.Outlook and valuations: Rich; maintain ‘REDUCE’ Following sluggish performance, we anticipate mere 6% CAGR in profitable ratings sales, despite 19% CAGR in research revenue over CY14-16. Ergo, we estimate overall 14%/17% CAGR in revenue/operating profit over CY14-16. Owing to rich valuations, we maintain ‘REDUCE’ with revised TP of INR 1,491 based on SoTP valuation, says Edelweiss Securities Limited research report.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.

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