Q3 and 9M FY16 Financial Results

D. R. Dogra
MD & CEO

Disclaimer

Certain statements in this document may be forward-looking

statements. Such forward-looking statements are subject to certain
risks and uncertainties like government actions, economic
developments, and many other factors that could cause the
companys actual results to differ materially from those contemplated
by the relevant forward-looking statements. Credit Analysis and
Research Ltd. will not be in any way responsible for any action taken
based on such statements and undertakes no obligation to publicly
update these forward-looking statements to reflect subsequent events
or circumstances.

Q3 & 9M FY16
2

Contents
Highlights

Financial & Business Performance

MCR / CDQI

New Developments

Economic Backdrop

Q3 & 9M FY16
3

Highlights: Q3-FY16
Financial Indicators
Growth in Operating Revenue of 0.81% in Q3-FY16 over Q3-FY15
Rating Income increases by 1.01% in Q3-FY16 over Q3-FY15
Total Expenses decrease by 10.24%
EBITDA margins at 64.60% and PAT margins at 41.94% in Q3-FY16
660 new clients added during Q3-FY16
Business Profile
Total volume of new debt rated is Rs 2.3 lakh crore in Q3-FY16 as against
Rs 1.98 lakh crore in Q3-FY15
Total number of instruments rated were 1,751

Q3 & 9M FY16
4

Highlights: 9M-FY16
Financial Indicators
Growth in Operating Revenue of 5.71% in 9M-FY16 over 9M-FY15
Rating Income increases by 5.45% in 9M-FY16 over 9M-FY15
Total Expenses decrease by 2.76%
EBITDA margins at 64.55% and PAT margins at 41.97% in 9M-FY16
2,126 new clients added during 9M-FY16
Business Profile
Total volume of new debt rated is Rs 7.36 lakh crore in 9M-FY16 as
against Rs 6.49 lakh crore in 9M-FY15
Total number of instruments rated were 5,002
Employee count at 565 as on December 31, 2015
Q3 & 9M FY16
5

Contents
Highlights

Financial & Business Performance

MCR / CDQI

New Developments

Economic Backdrop

Q3 & 9M FY16
6

Financial Performance
Rs crore
Rating Revenue

Q3-FY15

Q3-FY16

Growth

9M-FY15 9M-FY16 Growth

61.69

62.32

1.01%

178.20

187.91

5.45%

0.73

0.62

-15.84%

1.16

1.69

45.90%

Total Revenue

62.43

62.93

0.81%

179.36

189.61

5.71%

Other Income

2.84

0.99

-65.04%

40.36

6.14

-84.78%

Total Income

65.26

63.93

-2.05

219.72

195.75

-10.91%

Total Expenses

26.26

23.57

-10.24%

74.44

72.38

-2.76%

EBIDTA

40.18

41.30

2.77%

149.14

126.35

-15.28%

Operating Profit

36.17

39.36

8.84%

104.93

117.23

11.72%

PAT

26.24

26.81

2.17%

105.24

82.16

-21.93%

EBIDTA margin

61.57%

64.60%

67.87%

64.55%

Operating Profit margin

57.94%

62.55%

58.50%

61.83%

PAT Margin

40.21%

41.94%

47.90%

41.97%

Other Operating Revenue

Q3 & 9M FY16
7

Explanation for Other Income

The pool of investible surplus has come down after the special
dividend payment in FY15 by almost Rs. 220 crores.
The Company has stepped up dividend payout post listing.
The Company follows a prudent practice of investing in Fixed
Maturity Plans (where we need to stay invested for 3 years to
lower our tax outgo), in Equity MFs, Duration Products, etc. income
on which is booked only on redemption / maturity.
There is no loss of income but only timing difference in recognition
of income from these investments.

Q3 & 9M FY16
8

Financial Performance:Q3-FY16 (Rs. crore)

Total Revenue
64

Total Expenditure
62.93

62.43

28

26.26

62
60

23.57

24

58
56

20
Q3 FY15

Q3 FY16

Operating Profit

Q3 FY15

28
39.36

40

PAT
26.24

26.81

26

36.17
36

24

32

22

28

20
Q3 FY15

Q3 FY16

Q3 FY16

Q3 FY15

Q3 FY16

Q3 & 9M FY16
9

Financial Performance: Q3-FY16

Operating Profit Margin (%)

Q3

FY16

Operating

profit

margin

62.55
62
59
56
53
50
47

increased to 62.55% mainly due to lower

57.94

expenditure
headcount

due
and

to

reduction

other

cost

in

control

measures.
Q3 FY15

Q3 FY16

PAT Margin (%)

42

Q3 FY16 PAT margin stood at 41.94%

mainly due to lower expenditure and

41.94
40.21

37

Investment Income.
32
Q3 FY15

Q3 FY16

Q3 & 9M FY16
10

Financial Performance: 9M-FY16 (Rs. crore)

Total Revenue
190
180

Total Expenditure

189.61
75

72.38

179.36
70

170

65

160

60
9M FY15

9M FY16

Operating Profit
120
110

74.44

117.23

9M FY15

110
90

104.93

100

70

90

50
9M FY15

105.24

9M FY16

9M FY16

PAT
82.16

9M FY15

9M FY16

Q3 & 9M FY16
11

Financial Performance: 9M-FY16

Operating Profit Margin (%)
64

61.83
58.50

9M FY16 Operating profit margin increased

to 61.83% mainly due to lower expenditure

58

due to reduction in headcount and other cost

52

control measures.

46
9M FY15

9M FY16

PAT Margin (%)

9M FY16 PAT margin reduced to 41.97% from

50

47.90

47.90% mainly due to lower expenditure and

income from investments.

41.97
40

30
9M FY15

9M FY16
Q3 & 9M FY16
12

Business Performance
Total Active Clients
11,500

11,182
10,950

11,000

10,500

10,000

10,332

9,828

9,500

9,000

Mar'15

June'15

Sept'15

Dec'15

Q3 & 9M FY16
13

Business Performance: Q3-FY16

Volume of Debt Rated (Rs lk cr)

2.4

2.30
1.97

1.8
1.45
1.30
1.2
0.62

0.71

0.6
0.05

0.14

0
Short & Medium term

Long term
Q3 FY15

Bank Loan Ratings

Total

Q3 FY16

Q3 & 9M FY16
14

Business Performance: Q3-FY16

No of Instruments Rated

2,250

2,034
1,751
1,481

1,500

1,186
752
750

28

16

68

182

72

Short & Medium

term

Long term

Bank Loan Ratings

Q3 FY15

Others

Total

Q3 FY16

Q3 & 9M FY16
15

Business Performance: 9M-FY16

Volume of Debt Rated (Rs lk cr)

7.36
6.49

3.28

3.31

3.49

2.73
2

0.45

0.59

Short & Medium term

Long term
9M FY15

Bank Loan Ratings

Total

9M FY16

Q3 & 9M FY16
16

Business Performance: 9M-FY16

No of Instruments Rated

6,000

4,774

5,000

5,002

3,900

4,000

2,985

3,000
2,000

1,503
833

1,000

83

68

203 201

Short & Medium

term

Long term

Bank Loan Ratings

9M FY15

Others

Total

9M FY16

NSIC Ratings witnessed significant decline in FY16, however other grading products saw
an increase over last year.
Q3 & 9M FY16
17

Contents
Highlights

Financial & Business Performance

MCR / CDQI

New Developments

Economic Backdrop

Q3 & 9M FY16
18

Rating Movement
Credit Quality of domestic rated firms/entities declined during 9 months FY16 as
indicated by the MCR. The Modified Credit Ratio (MCR) declined from 1.14 in 9M-FY15 to
1.11 in 9M-FY16.

Movement in MCR
1.20

1.14
1.11

1.10
1.00

1.02
0.93

0.90
0.80

0.79

0.70
0.60
0.50
9M FY12

9M FY13

9M FY14

9M FY15

9M FY16

MCR Formula = (Upgrades + Retentions) / (Downgrades + Retentions)

Q3 & 9M FY16
19

CARE Ratings Debt Quality Index

The CDQI has been witnessing a downward movement since June15. The index declined steeply by 0.60
points to 91.94 in Oct15 and further to 91.78 in Nov15. It further continued to register a contraction in
Dec15 (and stood at 91.75.This downward trend of the index is indicative of lower quality of debt over the
last seven months.

Movement in CDQI Mar'12 to Dec'15

96.08

91.75
93.91

Mar'12
Apr'12
May'12
June'12
July'12
Aug'12
Sept'12
Oct'12
Nov'12
Dec'12
Jan'13
Feb'13
Mar'13
Apr'13
May'13
June'13
July'13
Aug'13
Sept'13
Oct'13
Nov'13
Dec'13
Jan'14
Feb'14
Mar'14
Apr'14
May'14
June'14
July'14
Aug'14
Sept'14
Oct'14
Nov'14
Dec'14
Jan'15
Feb'15
Mar'15
Apr'15
May'15
Jun'15
Jul'15
Aug'15
Sept'15
Oct'15
Nov'15
Dec'15

102
100
100
98
99.48
96
94
92
90
88
86

CARE Index
Q3 & 9M FY16
20

Contents
Highlights

Financial & Business Performance

MCR / CDQI

New Developments

Economic Backdrop

Q3 & 9M FY16
21

New Developments
CARE signed a Memorandum of Understanding
(MoU) with Japan Credit Rating Agency, Ltd. (JCR) to
collaborate with each other as strategic business
partners.
CARE entered into an agreement with GREX
Alternative Investments Market to provide a broad
analytical framework within which CARE Ratings will
be involved in conducting Rating / Grading exercises
for companies registered on GREX platform.

Q3 & 9M FY16
22

Contents
Highlights

Financial & Business Performance

MCR / CDQI

New Developments

Economic Backdrop

Q3 & 9M FY16
23

Economic Backdrop
10

GDP expected at 7.5 - 7.6% for FY16

5.0

Reviving Industry Growth

4.0

3.8

8.4
8

7.5

7.4
7.0

6.6
6

3.0
2.5

2.0

1.0

0.0
Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16

FY15 (Apr-Nov)

FY16 (Apr-Nov)

Q3 & 9M FY16
24

Economic Backdrop
8

68

Easing Inflation

Depreciating Currency

6.67
6

5.27

5.34

5.09
4

3.87

4.05

65.93

66
3.95

64.91
2
64
0

0.33

63.50

Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16

-2
-1.82

-2.15

-2.25

-4

62.00

62

-4.55

62.25

60.59
60

-6
WPI (%)

CPI (%)

Q2
FY15

Q3
FY15

Q4
FY15

Q1
FY16

Q2
FY16

Q3
FY16

Average exchange rate for Jan stood at Rs 67.10

per dollar
Q3 & 9M FY16
25

Economic Backdrop
15

Growth in Credit (%)

10
5

2,000,000

11.9
9.5

Increased CP Issuances (Rs cr)

1,197,160

3.9 4.0

1,000,000
1.0 0.4

0.8

820,890

1.9

0
Bank Credit

Industry

Apr-Nov FY15

Services

Retail

Apr-Nov FY16

9M FY15

9M FY16

As of Dec15 total bank credit grew by 7.4% in FY16 (5.4%)

600,000

Corporate Debt Raised (Rs cr)

400,000

299,725

337,091

307,037

355,930

200,000
7,31218,839
Public Issue

Private Placement
9M FY15

Total

9M FY16
Q3 & 9M FY16
26

Economic Backdrop
12.00

8.2

Repo rate & Base Rate

10.16

G Sec Yield (%)

10.00
9.60

7.75

7.8
7.78

8.00
7.6

Base Rate (%)

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

Jul-15

Jun-15

May-15

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

Jul-15

Jun-15

Apr-15

May-15

Repo Rate (%)

Apr-15

7.4

6.00

G Sec Yield (%)

Q3 & 9M FY16
27

Economic Outlook for rest of FY16

Exchange expected to be volatile

Inflation to be in the 5 plus range
No expectations of lowering repo rate by RBI
Capital formation to be muted

Q3 & 9M FY16
28

Thank You

Q3 & 9M FY16
29