>CRISIL (EMKAY)

Credit Rating Information Services of India
Result Update
Target - 3,650

Results inline with expectations

CRISIL’s CY08 numbers were in line with our expectations. The operating revenues have grown by 31%yoy to Rs5.3bn. The reported net profit at Rs1.4bn has grown by 67.7% yoy. However Q4CY08 performance was moderate on account of slower growth in advisory business, Forex losses and one-time expenditure. The reported operating margins contracted by 266bps yoy and
1,630bps sequentially to 27.4% during the quarter on account of higher employee expenses, goodwill write off and Forex loss during the quarter.

The stock is currently quoting at 9.3x CY09E EPS, The company has declared a total dividend of Rs70 per share (including Rs35 per share interim) reflecting a dividend yield of 3.3%. We maintain our BUY recommendation with price target of Rs3,650.

Forex losses and advisory impact revenue growth
The CRISIL net operating revenue for Q4CY08 grew by a moderate 15.1%yoy to Rs1.4bn. The moderate performance was on account of following reasons:

# CRISIL has sold of its one of the international subsidiaries Gas Strategy Group (for ~Rs210mn) with effect from December 10, 2008. Hence, the revenues from the business were not there for 21 days. Along with the same we were expecting slow down in the advisory business.

# The research business has also grown by just 16.1% yoy during the quarter. However, during the quarter there was no loss of clients. We expect the business to grow by 20% in CY09 albeit with back ended growth. However, the rating business has continued its robust performance, as the revenues have grown by 37.7% yoy and 16.5% qoq to Rs526mn during the quarter. The growth was driven by continued demand for bank loan rating and SME rating.

However, the rating business has continued its robust performance, as the revenues have grown by 37.7% yoy and 16.5% qoq to Rs526mn during the quarter. The growth was driven by continued demand for bank loan rating and SME rating.

To see full report: CRISIL