CARE Ratings Limited


(JayNach) #101

Thanks @dd1474, @kv1

@kv1: I am new to value investing. This is off topic, but are sector reports like these available for free or each provider requires a subscription. And which ones in your opinion are the best sector report providers?

Thanks again, really appreciate it!


#102

CARE descent results:

http://www.careratings.com/upload/NewsFiles/FinancialReport/CARE%20Ratings%20Limited%20Press%20Release%20for%20Q4%20FY18%20and%20FY18.pdf

CARE Ratings Ltd has recommended, subject to the approval of shareholders a final dividend of Rs.37/- per equity share


(Ajay) #103

I cant comment on the situation now, but few years ago, one of the large private sector banks used to do the following for their internal risk rating used to price loans:

CRISIL rating: Accept as is usually i.e. if CRISIL rates as AA+, consider it as AA+ for loan pricing
ICRA/CARE: Cut 1-2 notches i.e. if CARE rates as AA+, the bank would consider it internally as AA or even AA-

Hope this gives you an idea on the relative reputation of rating agencies.


(Hims) #104

Yes, even I have heard that it is common for players below Crisil (as per your order) to promise a better rating in lieu of business. Even for many promoters low cost version works specially with dual rating scenario of CPs. Hence the jump we can see in latest results.


(tyrion lannister) #105

if a company deserve AA rating in CRISIL , and thens he/she gets AA+ in CARE and Bank consider it AA… All things turn out to be Same


(AJ) #106

Please avoid making comments with out referring to the original source of information. CARE is an organization of repute and have proved their standing in the market. If you have any specific awareness about an inappropriate/ flawed rating methodology adopted by CARE then you should bring it to the notice of relevant regulatory bodies(FYI - Credit rating agencies in India are regulated by the SEBI through the SEBI (Credit Rating Agencies) Regulations, 1999).
Please understand that credit rating agencies are performing an important fiduciary function not only for the company and banks but for the economy of this country at large. I hope we use this forum for productive discussions and not gossiping.

AJ


(sivaprakasamp) #107

Mohnish pabrai picks up 0.7% stake in CARE.


(abhishekshete) #108

**CARE Pabrai.pdf (165.1 KB)
**


(abhishekshete) #109

Mohnish Pabrai Holds 5% Stake in CARE Ratings


#110

Good info.

However, the members of this forum should have the wisdom of not drawing any comfort from the investment by celebrity investors.

Rain and KRBL (Pabrai), recent Canfin saga (BM), Countless investments by Porinju(LEEL etc), Karnataka Bank by Kedia for a few examples. Investors drawn by investment of these celebrities were badly burned.

A celebrity investment should no way influence investment decision. Should solely on the merit of investment. My 2cents.

Disclosure: No investments in Care Ratings


(AmitContrarian) #111

Looks like there is a good technical support here …


(Gorthi) #112

What does it mean . It would be great if you share some details about the chart…

Sorry it my question looks basic…Iam actually new to the charting…


(abhishekshete) #113

Hello Everyone -

I have been trying to evaluate the management of CARE.
CARE is a professionally managed company and it does not have any nominee director or any director holding any substantial shareholding in the Company. Isn’t this a cause of concern with the share holders? I am not sure about how does a company do in this management structure. Do we have any example that we can compare to? How would one evaluate the management of CARE?


(Karthik) #114

One of the positive of CARE top management is it has promoted someone who has been with the company for more 30 as the CEO. I would prefer a CEO who has grown with the organisation than a new CEO who has been recruited from outside. I think there are some pvt banks and other financial organisation that have similar shareholding patterns. When your competitors invest in you that means you are doing the right things.


(yesudeep) #115

Funny you say that. Do consider reading this book “The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success.” While having someone from the organization climb the ranks to become CEO is not necessarily a bad move, it can be detrimental to the shareholders if the person is not well-versed in capital allocation and has no personal economic interest in the business. Most operational people tend to focus on operations because that’s what they know well—it’s their comfort zone—not capital allocation, which ironically is the CEO’s primary job. Quite a few operational people do not hold stock in their own businesses either. I’d much rather prefer a person (outsider or insider) who makes stellar capital allocation decisions and has his/her net worth aligned with the minority shareholders than someone who only knows the business operations inside out—we can assume the latter is fairly clever and energetic, but integrity remains to be tested. So my questions at this point would be:

  1. Does the appointee have his net worth in the business that he will apparently head?
  2. Will he focus more on capital allocation rather than only operations?

Here’s to hoping the appointee does both.


(tyrion lannister) #116
  1. the company is in service business… company will distribute earning as dividend… capital allocation is not there in this case
  2. pro n cons would be there for professional management. they have esop which they sell in short-term as well as long-term when they mature
  3. does management intention to grow. You dont have to ask, you have to c whether the company has gained market share or lost

(yesudeep) #117

Namaste dua, I’m not quite sure what you mean by “capital allocation is not there in this case.” Why does a service business imply no capital allocation is required? AFAIK, a dividend payout is allocating capital just as much as retaining earnings is. As an aside, I recommend reading the book that has been referred to. I’d appreciate clarification. Thank you.


(ASPN) #118

Agree with this. By definition, Capital allocation is nothing but allocating financial resources to various facets of the business so as to increase efficiency and maximize profits. Optimum capital allocation only can generate maximum shareholder returns. It can be achieved by any of the following (or a combination, though the list is not exhaustive) -

  1. Reinvesting in the business (organic and/or inorganic growth)
  2. Investing in R&D and technological upgradation (thereby creating a differentiated product, offering, IP)
  3. Rewarding shareholders (dividends and buybacks)
  4. Investing the excess funds for getting max possible returns

(Arun S G) #119

Assuming CRISIL is an efficient allocator of capital, its investment in CARE exactly a year ago sends a very strong signal that the ROI in CARE is better than the internal ROI for CRISIL. If not a purely Capital allocation decision, it might very well have been a more strategic investment decision, which though has been rejected by CRISIL stating that

“The investment was made pursuant to a public bid process conducted by Canara Bank and is in compliance with all applicable laws and regulations,” Crisil said in an emailed reply to ET. “This is an investment. We are optimistic about the long-term growth prospects of the credit rating sector.”

Read more at:
//economictimes.indiatimes.com/articleshow/60050138.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst"

Of course this investment has not paid off yet, but one year is short term for an investment of this nature to pay back. Irrespective of motive, this is surely a capital allocation act - which is investing in business, but of a competitor. The end game here clearly has not played out yet.

Disc: Invested.


(AmitContrarian) #120

I see the bond markets , hence the rating market will continue to grow in india . CARE is very professionally run organization.
Doesn’t matter who owns it, what matters the most is how they treat minority shareholders.
So, Far i have no complains regarding that.

All the U.S rating agencies are interested in it for a reason, CRISIL paid 1600 /- share for a reason and still trying to convince LIC and other to sell their stake in it.

Set up in 1993, CARE is the second largest rating agency in the country in terms of domestic rating income with estimated 29% market share against Crisil’s 31%. Other main players ICRANSE -0.20 % and India Ratings have 21% and 11% shares, respectively , according to industry estimates.

Read more at:
//economictimes.indiatimes.com/articleshow/59521321.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst