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Credit Analysis and Research Second largest rating agency After establishing in rating of debt and bank loans, proposes to diversify into other instruments and go international
Apart from rating, the company also provides specialized grading services including IPO grading, equity grading and grading various types of enterprises including energy service companies, renewable energy service companies, shipyards, maritime training institutes, construction companies, rating of real estate projects etc. The company has graded the largest number of IPOs since the introduction of IPO grading started in India. Care is also into providing general and customized industry research reports, economic research reports on debt markets, budget analysis, policy analysis etc and customized research covering key areas such as market sizing, demand estimation, demand supply gap analysis etc upon request of clients. Ratings of debt instruments and bank loans and facilities constituted about 86% of total revenue in the fiscal ended March 2012 (FY 2012). However, the company intends to diversify by expanding various income-generating pool of products such as rating small and medium enterprises equity and real estate projects, grading educational institutes and debentures, and going international Company is already recognized as a Rating agency in Maldives to carry out ratings of debt instruments and bank loans and facilities in Maldivian companies. Care has entered into a non-binding MOU with 4 credit rating agencies located in Portugal, Brazil, Malaysia and South Africa to establish an international credit rating agency which would provide international scale ratings to assist local issuers in mobilizing resources from international financial markets. Company also has plans to provide rating services in Nepal and Mauritius in future Care is entering the capital market through an offer for sale by IDBI Bank, Canara Bank, SBI, IL&FS, Federal Bank, IL&FS Trust, Milestone Trusteeship, ING Vysya Bank, and Tata Investment. About 72 lakh equity share of face value of Rs 10 each in a price range of Rs 700 to Rs 750 per share are being offered by the selling shareholders. There will be no issue of fresh shares. Strengths
Weaknesses
Valuation Unconsolidated net sales were up by 12% to Rs 188.98 crore, while lower number of debt ratings resulted in OPM declining 360 basis points to 71.6% in FY 2012 over FY 2011. Other income was up 79% and depreciation down 18%. Finally, PAT rose 24% to Rs 115.70 crore. EPS on post-IPO equity of Rs 28.55 crore of face value of Rs 10 each stands at Rs 40.5. Net sales stood at Rs 89.90 crore, OPM 65.9% and PAT Rs 50.05 crore in the six months ended September 2012 over a year ago. Due to higher debt issuances, sales and profits should be higher in the second half compared with the first half. Hence, first half figures have not been annualized. The shares are being offered in the price band of Rs 700 to Rs 750 per equity share. The P/E at the lower band works out to 17.3 times and at the upper band 18.5 times FY 2012 earning. On FY 2012 consolidated EPS, Crisil is trading at 35 times and Icra at 26 times. However, given the already strong diversified business model and global parents of the listed competitors, the P/E discount that Care is offering compared with Crisil and Icra is justified.
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