Poor Q3 upsets CARE Ratings

Shares of Credit Analysis and Research (CARE Ratings) are down 3.5% to Rs. 1,562 a piece, when broader markets are ruling firmly in the green with BSE Sensex up 0.6%. Company has declared Q3FY15 earnings after market hours yesterday, and the market is not too excited about the results.

CARE Ratings’ revenue from operations declined 16% QoQ to Rs. 62 crore from Rs. 74 crore in Q2FY15. Upto Q2FY15, it was earning hefty interest income, being reflected in quarterly other income close to Rs. 23 crore in the September quarter. This non-operative income would directly add to the company’s bottomline. However, since company has shared its surplus cash with investors by way of a special dividend of Rs. 65 per share in Q2FY15, other income has been reduced to merely Rs. 3 crore in Q3FY15. Thus, net profit for Q3 halved to Rs. 26 crore from Rs. 52 crore in Q2. EPS for Q3 and 9mFY15 is Rs. 9 and Rs. 36 respectively.

In its notice for Board Meeting, company had informed the stock exchanges that it may consider declaration of interim dividend, if any, along with the Q3 results. However, no dividend for the third quarter has been declared by the company. With poor results, this is another sentimental blow, hence the muted share price reaction to the Q3 results.