CARE Rating

The credit rating agency, Credit Analysis and Research Ltd (CARE) posted a flat set of numbers for Q3FY14. Its net profit was almost status quo at Rs.28 crore, up 0.7% (YoY) and EBITDA was also up by a mere 1% at Rs.39 crore. Total revenue rose 13% at Rs.60 crore. CARE's performance was affected by the overall macroeconomic conditions and capital market activity. Economic conditions have been subdued with the GDP growth in Q2 coming in at 4.8% and GDP in H1 FY14 growing at 4.6%. Industry growth has been deteriorating, with IIP registering a negative growth of 0.2% in April – November FY14 as against a positive growth of 0.9% in the corresponding period last year.

Subdued macros will continue onto coming quarters and till that improves, CARE will also continue to have lackluster numbers. The almost dead IPO markets is also adding to the misery. During 9MFY14, rating income improved by 12.9%. The growth was driven by expansion in the number of bank facilities rated from 3,838 in 9m FY13 to 4,414 in 9m FY14 and number of debt instruments from 221 in 9m FY13 to 236 in 9MFY14. The volume of debt rated increased from Rs. 4.80 lakh crore to Rs. 6.45 lakh crore during 9MFY14, growth of 34.4%. The total number of assignments increased by 13.6% to 5,444 in 9m FY14 as against 4,790 in 9MFY13.

The company had met with overwhelming response when it had gone public in Dec’12. The company had raised Rs.540 crore in an IPO that was over-subscribed by nearly 41 times. The IPO price was Rs.750 and today it remains just below the price at Rs.720 levels. IDBI Bank is the biggest shareholder in the company, followed by Canara Bank and other shareholders are – IL&FS Financial, Bajaj Holdings, Federal Bank, IL&FS Trust, Aditya Birla PE Fund, Serum Institute of India, Franklin Templeton, ING Vysya amongst many more. 63.68% stake is held by FIIs and DIIs.