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Result Highlights

Overall performance

* Net revenues came in at Rs5,285mn (+12% yoy and +7% qoq), which are ahead of our estimates by 3%.  

* EBIDTA at Rs1,393mn was ahead of our estimates by 11% and EBIDTA margins were ahead of estimates by 210bps at 26.4%. EBIDTA was higher by 20% yoy and EBIDTA margins were higher by 172bps yoy.  

* PAT at Rs1,008mn was ahead of our estimates by 24.2%. PAT surged by 52% yoy and 21% qoq.

* Dividend: Board of Directors, inter alia, has approved the payment of Interim dividend of Rs. 8 per equity share of face value of Re 1 each.

* Estimates: We have revised our estimates by 10%, 13% and 11% for CY21, CY22 and CY23 respectively to factor in better than expected performance.   

* Valuations: The stock is trading at CY23E P/E of 37.3x. We upgrade our target price to Rs3,371 from Rs2,675. We have raised our multiple to 45x average of CY22 and CY23 earnings from 40x CY22 earnings.  

Our view:

CRISIL delivered better than expected performance especially in the Research and advisory businesses. Ratings business performance was weaker than expectations on the back of lockdowns imposed during COVID. We expect the ratings business to come back to growth as the economy opens up. We have revised our estimates higher to factor in better than expected delivery in research and advisory business. Also, we have factored in lower growth in ratings business now. We have revised our valuation multiples considering higher earnings growth. Retain our BUY rating.

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