Crisil, : 2QFY2012 Result Update: Angel Broking,

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For 3QCY2011, CRISIL’s net sales grew by 38.3% yoy to `220cr. The company
reported a 281bp yoy expansion in OPM to 38.1%. Net profit declined by 20.2%
yoy to `60cr. We continue to remain Neutral on the stock.
Top line posts strong growth, PAT declines: For 3QCY2011, CRISIL’s top line
reported 38.3% yoy growth to `220cr, led by strong growth in its research
segment, which witnessed 48.0% growth because of addition of Pipal’s revenue
for the full quarter and strong revenue growth in Irevna and CRISIL Research.
The rating segment also picked up during the quarter, registering modest 14.8%
yoy growth. The advisory segment also witnessed an increase in its revenue,
registering 44.3% yoy growth. The company’s EBITDA margin increased by
281bp yoy, largely due to lower employee cost, which declined to 40.5% of sales
from 42.8% of sales. Net profit came in at `60cr, down 20.2% yoy. However,
adjusting for other income, net profit increased by 74.5%. Other income declined
by 88.1% to `5.3cr compared to `44cr in 3QCY2011.
Outlook and valuation: We expect CRISIL to post a 25% CAGR in revenue over
CY2010-12 and continue to maintain its leadership position. CRISIL has
announced another round of buy back of shares. The company will be purchasing
shares directly from the market with a maximum price of `1,000/share and up to
an aggregate amount of `80cr. With current market capitalization of `5,959cr,
the company will only be able to buy back 1.3% (assuming CMP of `839/share)
of the total equity, which will not have any significant impact on our estimates.
Currently, the stock is available at 24.2x CY2012E earnings, which is at the
higher end of its historical range of 16.4-29.9x one-year forward EPS.
We continue to maintain our Neutral recommendation on the stock.