CRISIL

CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. Standard and Poor’s which is the world’s foremost provider of independent credit ratings is CRISIL’s  majority shareholder. S&P is a part of The McGraw-Hill Companies. CRISIL’s rating experience covers more than 45000 entities, including 30,000 small and medium enterprises (SMEs), with major clients being world’s largest banks and leading corporations. CRISIL pioneered ratings in India in the year 1987 completing its 25^th year recently. The company is headquartered in Mumbai.

CRISIL has the following Business areas:

• CRISIL Ratings
• Global Research & Analytics
• Research
• Capital Market
• Infrastructure Advisory
• Risk Solutions.

A CRISIL rating reflects CRISIL’s opinion on the likelihood of timely payment of interest and principal on the rated obligation. It provides an unbiased and independent opinion as to the issuer’s capacity to meet its financial obligations.

Due to the challenging business environment in 2011 owing to high interest rates, tight liquidity, and the  focus  of  monetary policy to rein in inflation, India’s  corporate  bond  market  remained inactive  for  most of the year, with issuers  delaying  long-term  issues.

Bank Loan Ratings (BLR) maintained a healthy growth over the previous year whereas Small and Medium Enterprise Rating (SME) remained stable.

Financials

It can be seen that the company has no debt in its balance sheet. Also the Return on capital employed has improved significantly last year as compared to the historical performance. Return on net worth has performed well too indicating greater return by the company.

Company’s operating revenue grew by 21% in 2011 on account of growth in both Ratings and Research business. Owing to the expansion taken place in Pune, China, Argentina, and increase in head count company’s operating expenses grew by 24%. Net profit after tax (excluding one-time gain) increased by 18%.

If we look at the valuation multiples we find that the company’s overall valuation has improved with a increase in key multiples like P/E ratio, EV/EBITDA.

Currently the investors faith on the company’ share has improved as a result of which a high Price to Earning ratio is reported.

The Company has always taken care of its shareholders and have been paying dividend continuously. The table below shows it very well about the company’s regular dividend policy to take care of its shareholders.

Outlook

The challenging economic environment has impacted the domestic advisory business.  Weak equity markets, high costs of borrowing, delay in  critical reforms and policy decisions with respect to land acquisition, mining,  and power  sector  have  forced  Corporates to defer investment  decisions, especially in the private sector.

Infrastructure advisory business of CRISIL is however expected to improve and grow, owing to the fact of increased spending on infrastructure by the government. The 12^th five year approach plan very well talks about infrastructure policy which will certainly attract business for CRISIL. CRISIL Risk Solutions business expanded its coverage in the global markets which will continue to show its effect in future and company is expected to perform very well in future.