February 22, 2017 / 13:57 IST
Edelweiss' research report on Crisil Revenue grew 11.7% YoY led by strong performance in the risk & analytics segment and addition of new clients led by robust spurt in stress testing, model validation and regulatory changes. Coalition continued to win clients in transaction banking and securities service analytics along with traction in Global Financial Research business, which offset margin pressure in traditional research. EBIT, however, grew 28% YoY.
Outlook
Though ratings industry’s healthy prospects and RBI push to deepen the bond market brighten CRISIL’s long-term growth prospects, we maintain ‘HOLD’ due to government subsidy cut and sluggish credit growth along with rich valuations. Our target price stands at INR 2,267 using DCF model assuming 20% growth for first 5 years, linear growth over the following 5 years and terminal rate of 7% and discount rate of 10.5%.
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