ICRA - Sluggish debt market issuances led to fall in revenues::Emkay

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ICRA

Sluggish debt market issuances led to fall in revenues

REDUCE

CMP: Rs 1,008                                       Target Price: Rs 900

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n     ICRA’s Q1FY12 operating income/ Adj. net profit at Rs387/85mn significantly below expectations, led by decline in rating revenues

n     The rating rev declined by 12% yoy led by sluggish debt market issuances. Significant low volumes on high margin bond rating business reflected in 760bps drop in OPMs

n     Cutting our earnings by 30/26% each for FY12E/FY13E assuming lower margins. Downgrade rating  from ACCUMULATE to REDUCE with TP of Rs900

n     What can change our view?: Improvement in investment scenario and debt issuances as the rating business has very high operating leverage