Yes. Its going through bad phase maybe. mainly after the IL& FS crisis. But interesting thing to note that CRISIL has not rated any of IL& FS debt instruments ( as per crisil).
Yes. Flat growth is a major damper for such valuations.
But maybe it’s a GREAT BUSINESS AVAILABLE AT FAIR VALUATIONS as per Warren Buffett.
I may be biased as I own this stock since 1 year and have seen going it from 1700 to 1200 and again to 1700 now. But holding it with patience in hope that it will be a GREAT investment in LONG TERM.
Crisil has reported a fall in profit for the September 20 quarter compared to September 19 quarter. The profits have fallen from 105 Crore rupees to 90 Crore rupees. The primary reason for this fall is the dramatic increase in employee benefits expenses. Employee benefits expense has shot up from 222 Cr in September 19 quarter to 270 Cr. Is anyone aware of the reason for this jump in employee expenses?
I have written to investors@crisil.com asking for the same. Waiting for their reply.
This increase in employee cost seems to be majorly on account of acquisition of Greenwich Associates LLC. Sequential increase in employee cost is not significant. Greenwhich has contributed Rs.47.92 cr of revenue and Rs.20.25 cr of net loss for the quarter ended Sep 2020.
To people who are following this, do you think there’s any scope for revenue improvement in CRISIL? The price has not gone up for stocks in this space for the past 5 years probably because of this very issue. Disclosure: not invested but interest in further study if I get any indication that the credit rating agencies can do better in terms of revenue.
Crisil only gets about 30% from rating business. Major source of revenue is from Research (60%), if you wanna understand the growth driver, focus on that piece. On price remaining same for last 5 years, i believe it is time correction in a stable company.
The stock is coming out of a 5 year long consolidation and has completed the following processes on long term charts…
Double bottom formation…with strong support @1100
** upside breakout after double bottom
*** post breakout sideways movement / base building process.
In the next few months, it can start rallying and has a very good long term target with less downside risk. A monthly close above 2150 signals the end of 5 year long consolidation and beginning of the rally / uptrend in CRISIL
Apparently the fintech that they have developed is the best in the industry on a global scale and they are focusing more on advisory business particularly to medium scale enterprises. As interest rates rise and growth returns; there may be a good business for consultancy and rating…particularly in infra sector.
The volatility compression on long term charts is so severe that a breakout appears to be inevitable in the next 1-2 quarters…and low share capital of just 7 crores and very high promoter holding and the rest by strong hands like Rakesh Jhunjhunwala may ensure a rapid rise in price once the rally starts…
There is also a possibility that the stock may again come down to 1500/1700 level …hence I may average down at these levels or average up on breakout…
On the whole a safe and promising stock to hold for long term with expectation of 3x plus returns…
Thanks for the excellent write up.
From FY 20 AR, that was released a few days ago -
The GR&A business closed big opportunities related to stress testing, model validation and a large IBOR transition deal and continued to tap into opportunities generated by regulatory guidelines around better credit risk management practices.
Immediate areas of focus for the core client base include IBOR transition and front office transformation to deliver pricing and risk consistency required under the Basel IV processes. European banks are expected to significantly invest in these areas now while US banks have already taken the lead here
Is there a way to measure the opportunity size for CRISIL in terms of transitioning from IBOR to the newer regulatory guidelines like ARR, SOFR etc?
Can someone explain me the Moat of CRISIL and opportunity size in the Research & Analytics segment, Undoubtably are the best in rating business & gaining marketshare in India.
If someone here can give insights on their Research & Analytics part of business would be great!
TIA
Hi,
I saw one of PPFAS’s investor connect videos. Mr Rajiv Thakkar did mention that they started to build position in ICRA but changed their mind. Due to that the ICRA position is very small (around 2%) portion of their portfolio.
