Saturday, July 25, 2009

Crisil and ICRA Earnings

Crisil reported CY2Q09 on expected lines. Ratings biz continues to grow driven by bank loan ratings requirement of Basel-II. Research is not growing, as Irevna's outsourcing biz has stalled. EPS growth from cont ops at 12% is in-line.

ICRA continues to grow faster than Crisil as it is a pure play on Indian ratings. In FY1Q10, its EPS jumped 72%.

However, the sequential picture is much different. Crisil's rating revenues went up from Rs597mn in CY1Q09 qtr to Rs 607mn in CY2Q09 qtr. ICRA's rating revenues, on the other hand, declined from Rs 288mn in FY4Q09 to Rs 201mn in FY1Q10 - that's a seq decline of 30%. Thats very strange.

Both companies are at 18-19x, but it is quite irrelevant. The relevant issue is what SEC does with these companies. Seems like RBI in India is very happy with the way these companies are.

Also note, Berskhire sold some Moody's last week.

Disclosure: Long Crisil

Disclosure: Sold LICHF as NIMs compressed drastically. Stock is not going anywhere till 2Q earnings now, unless they do a QIP at Rs650. 2Q earnings will be in Oct, which is a long time away.

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