CRISIL Ltd - Research Report

Private Client Research





CMP (Rs)





March 26, 2020

Sensex: 29946.77

CNX Nifty: 8641.45


BSE: 500092

Current MCap (in Rs. Crores)
Expected MCap (in Rs. Crores)
Investment Duration
10 Years


March 26, 2020



CNX Nifty








Stock Data

CMP (Rs)
Face value (Rs)
52 Week Range (Rs)
2068.00 - 1052.70
Market cap (Rs Crores)
Price To Book Value (x)
P/E Ratio (x)

One Year indexed Stock Performance

CRISIL Ltd Sensex
Return (%)


(in %)

+91 22 6639 3000


Company Profile
Incorporated in 1987, CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint. It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

Ownership: CRISIL is majority owned by S&P Global Inc, a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

Clientele: The company’s clients range from micro, small and medium companies to large corporates, investors, and top global financial institutions. CRISIL works with commercial and investment banks, insurance companies, private equity players and asset management companies globally. The company also works with governments and policy makers in the infrastructure space in India and in other emerging markets.

Business model: Under the issuer-pay business model, rating agencies charge issuers of bonds, a fee for providing credit ratings. As part of the rating process, these rating agencies obtain from issuers relevant data and information that might otherwise be unavailable to investors and other market participants, and incorporate their opinions of credit quality. Since the issuer pays for the ratings, the agencies can make the ratings widely available to the market free of charge.

Value addition: CRISIL’s analyses, insights and solutions help lenders, borrowers, issuers, investors, regulators and intermediaries make sound decisions. The company helps clients manage and mitigate risks, take pricing and valuation decisions, reduce time to market, generate more revenue and enhance returns.

  1. Business segments
    Ratings: The company pioneered credit ratings in India in 1987, and emerged a leader with its independent, analytical rigour and innovation. As a full-service rating agency, it rates the entire gamut of debt instruments, and provides a globally unique and affordable rating service for SMEs. Borrowing companies leverage their ratings for enhancing their access to funding, widening range of funding alternatives, and optimising cost of funds. Investors and lenders use CRISIL ratings to supplement their internal evaluation process and benchmark credit quality across investment options. CRISIL’s ratings act as benchmarks for pricing and trading of debt instruments for markets at large.
    1. Corporate Sector Ratings: CRISIL pioneered the first corporate sector rating in 1988. Today, one out of every two companies in India is rated by CRISIL. CRISIL follows a three-pronged approach to arrive at a standalone credit rating of a given firm, comprising evaluation of:
      a) Business risk – factors in industry risk, market position, and operating efficiency of the entity. b) Management risk – considers competence, integrity and risk appetite of the firm’s management. c) Financial risk – assesses accounting quality, present and future financial position, cash flows, and financial flexibility of the firm. Project based risks are also factored in at this stage. Corporate sector instruments include the following:
      • Bond Ratings: The company is an undisputed market leader, with two in every three of India’s corporate bonds bearing CRISIL’s rating. It has rated a variety of bonds/long term debt capital market instruments ranging from plain vanilla debentures to hybrid instruments such as optionally convertible debentures, foreign currency convertible bonds etc., issued by Indian corporates.
      • Short term Ratings: The company links the short term ratings to the long term ratings of the issuer. It uses a framework which appropriately captures the key credit drivers for all short term debt ratings. This takes into account the liquidity position of the borrower, or any liquidity back up and credit enhancement, in addition to the overall credit profile of the issuer.
      • Bank Loan Instruments: A CRISIL Bank Loan Rating (BLR) reflects CRISIL’s opinion on the likelihood of the financial obligations (arising out of a rated facility) being serviced on time, and in full, as specified in the terms of the facility. CRISIL assigns ratings on the long- and short-term scales, depending on the original maturity of the facility.
      • Fixed Deposits: CRISIL employs a dedicated rating scale for Fixed Deposits (FDs). CRISIL believes there is a strong linkage between the rating on an issuer’s FD programme and the issuer’s own long-term credit rating, which reflects the fundamental credit quality of the issuer, and factors in the issuer’s funding sources (including FDs), debt repayment profile, and liquidity.
    1. Financial Sector Ratings: CRISIL rates a large number of financial sector entities, including banks and non-banking financial institutions, housing finance companies, securities firms, etc. CRISIL uses the ‘CRAMEL’ framework to rate finance companies. This entails assessment of six major parameters: capital, resource raising ability, asset quality, management, earnings, and liquidity.In addition, CRISIL also assesses instrument-specific risk factors and has developed ratings framework and methodologies to evaluate the same.
    2. New structured products: CRISIL has developed specific criteria for rating of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) that focus on assessment of quality of the underlying asset portfolio and cash flows, take into account the leverage, experience of the investment manager, risk management policies, etc. CRISIL was the first credit rating agency in India to introduce the Financial Strength Rating (FSR) for insurance companies in March 1998. Leveraging on its expertise in this sector, CRISIL developed a sound methodology and rated the first hybrid issuance by an Indian insurance company in April 2016.
    3. SME Solutions: CRISIL’s SME (Small and Medium Enterprises) offerings provide an independent verification, evaluation and assessment to establish credibility and enhance confidence of potential customers, suppliers and lenders. CRISIL’s ratings provides SMEs access to funding and faster credit as its ratings are considered credible by lenders. CRISIL’s rating is an indicator of overall credit worthiness of the entity, arrived at by analysing operating performance and financial strength.
  1. Research: The company analyses millions of data points using a large network of primary data sources to provide its clients with long-term and short-term future outlook on 86 core sectors in India including automobiles, consumer products, construction and capital goods, infrastructure, metals and others. The company also provides an in-depth analysis of the factors that affect the performance and profitability of these sectors.

    Industry research: CRISIL captures the influence of industry variables, the extent of positive/negative impact on the cash flows and debt repayment ability of companies over a 3-4 year’s horizon. The risk score for an industry is arrived at by aggregating the scores assigned to the relevant parameters like demand supply outlook, cost structures, competition and financial performance.

    Capital market research: The company plays a key role in India’s fixed-income markets andis the largest provider of valuation of fixed-income securities to mutual funds, insurers and banks, and the sole provider of debt and hybrid indices to mutual funds and life insurers. CRISIL also pioneered independent equity research in India, and is the country’s largest independent equity research house.

  2. Advisory: A leading advisor to governments, multilateral agencies, investors, large public and private sector firms, CRISIL Infrastructure Advisory provides a comprehensive range of advisory services in urban, energy and natural resources, transport and logistics, and infrastructure financing across India and other emerging countries. The company’s focus areas include policy and regulatory advisory, public private partnership frameworks, capacity enhancement and institutional strengthening for government and infrastructure agencies, implementation support to large infrastructure programmes, among others.

Management team

Ms Ashu Suyash (MD and CEO): Ms Suyash leads CRISIL’s Indian and global businesses, steering its efforts to deliver high quality analytics, opinions and solutions to corporations, investors, financial institutions, policy makers and governments. She also serves as a member of the Operating Committee for S&P Global. She has spent 30+ years in the financial services sector. Prior to joining CRISIL in 2015, she served as the CEO of L&T Investment Management Limited and prior to that, she held several key positions at Citibank during her 15+ years’ stint. Over the years, she has been recognised among the top 50 women in business in India and Asia by various publications.

Mr. Gurpreet Chhatwal (President & Business Head): He leads the large and mid-corporate ratings businesses at CRISIL. He is responsible for analytical execution, managing client relationships, enhancing CRISIL’s franchise through thought leadership and outreach. He is also responsible for spearheading the innovation agenda at CRISIL Ratings, while continuing to focus on raising the rating standards at an industry level.

Mr. Amish Mehta (Chief Operating Officer): He is a Chartered Accountant with over 25 years of experience across a variety of leadership roles in several large companies across different industries and functions. He had previously worked as the Chief Financial Officer with Indus Towers Limited and prior to that, as the Director Finance with Castrol India Limited. 

Mr Sanjay Chakravarti (Chief Financial Officer): He is a Chartered Accountant with over 24 years of experience in financial management, strategy, taxation, treasury and accounting. In his most recent role, Mr. Chakravarti was the CFO of Shoppers Stop Ltd, where he spent 12 years.

CRISIL, a leading global analytics company which empowers decision making with cutting edge analytics and innovation

Pioneer in introducing innovative products and rating instruments
The company continues to be the first port of call for innovative instruments. In 2019, CRISIL Ratings segment assigned a rating to Bharat Bond ETF for the first time. It also rated India’s first wholesale real estate sector receivables securitisation transaction. Another innovative product introduced was the Scenario Expansion Manager (SEM) platform, which enables banks to perform regulatory stress-testing more efficiently. It further launched ICON platform with new-age risk assessment models, and more modular and configurable features and also expanded in new domains of risk technology, finance change and transformation.

CRISIL rated companies have lowest one-year default rates amongst peers
CRISIL rated companies have lowest one-year default rates across credit rating agencies. In the last 5 years from 2015-19, average default rates in its AAA rated instruments have been Nil whereas its AA and A rated instruments had 0.1% default rates and further, its BBB rated instruments had 0.6% default rates, which is the lowest across credit rating agencies. Further the company’s stability rates across credit rating agencies are the highest at each investment grade rating category. 

Rise in market share in ratings segment
The company strengthened its leadership position in the corporate bond market, backed by preference for quality ratings among both investors and issuers. For CY19, CRISIL’s ratings revenue grew 7.4% YoY with domestic business up 12% YoY. Even though the company charges a premium in its pricing policy, it gained market share in corporate bonds’ ratings (to a 70% share) primarily because of its ratings quality. It was able to add a number of large corporates to its client list and increase its securitisation mandates. The company’s focus on high-growth segments and existing relationships strengthened its share in the bond market.

New Acquisition will provide additional levers to growth
The company took another step towards strengthening its position as a leading, agile, global analytics company with the acquisition of Greenwich Associates LLC. Greenwich is a US-based company and leading provider of proprietary benchmarking data, analytics and qualitative, actionable insights that helps financial services firms worldwide measure and improve business performance. The company announced the acquisition of Greenwich Associates LLC and its subsidiaries for USD 40 million; the acquired company generated USD 49 million in revenue in FY18, and has a large client base (over 300 financial institutions), which CRISIL expects to take advantage of.

Premium provider of Industry Research & Analytics
The company witnessed healthy revenue growth in the funds and fixed income business and continued to be the leading provider of fixed-income indices in India. CRISIL consolidated its position by launching five new indices in 2019, taking the total count to 96. Further, it works with 90% of India’s banking industry by asset base and is the leading provider of equity and fixed-income research support to banks. It successfully launched AlphaTrax – a multi-asset wealth tracking solution offering superior reporting and stronger risk control, new modules in learning solution platform and new reports in industry research. The company expanded its database of Quantix platform (the comprehensive and high-end data analytics tool) by covering more than 60,000+ companies and added new modules in analytics based on structured and unstructured data.

Investments in new platforms and solutions
The company has invested in building platforms to leverage its rich proprietary data, deep research capabilities, and unmatched experience in analytics. Its major investments consist of: i) Quantix, comprehensive data and analytics platform for BFSI ii) Fulkrum, proprietary enterprise “data to intelligence” platform iii) Coalition Analytics Platform iv) Credit risk automation and early warning signals. The company has also made investments in new growth areas in risk and analytics such as building proprietary tools like SEM, Co-creating solutions for banks and Risk-data pooling.

Covid 19 Impact
The Covid-19 pandemic will have a short term impact on its advisory business but we expect the company’s data, research and valuation services to do well, as recent credit concerns due to COVID 19 pandemic have led to increased risk awareness and demand for stronger credit research, analytics and risk-monitoring tools.


  1. Intense competition: There is increasing competition majorly from fintech companies and other new players in the research space, especially in valuation, indices and data analytics category.
  2. Uncertain macro environment: The key client segments for India Research are BFSI and auto sectors which are witnessing a slowdown or significant changes. Thus, it may impact discretionary spends on data & research.
  3. Technology-related risks: Information technology (IT) is core to the operations of all CRISIL businesses. Inadvertent or deliberate sharing of client confidential data or CRISIL proprietary information by staff is an important risk.


Global banks continue to make strategic investments in long-term business transformation and process reengineering initiatives, sustaining demand for regulatory and non-regulatory change management offerings. This has driven an appetite for automation and data analytics driven solutions, as firms look to adapt technology to improve their operational performance and gain competitive advantage. The global banking industry continues to face global headwinds and increasing margin pressures. Though the regulatory environment has matured across the US, the EU environment remains volatile. In addition, trade wars and Brexit-related developments have added to the business uncertainties.

Corporate bond issuances in India rose during the year, albeit driven by issuances from a smaller base of issuers comprising public sector financial institutions and financial sector entities with strong parentage. Certain issuers, especially non-banks and housing finance companies with wholesale lending model, continue to face resource-raising challenges. Going forward, muted private expenditure, combined with slowing domestic and export demand, are likely to constrain wholesale credit demand. Besides sluggish demand for wholesale bank credit, the BLR market remains affected by the guidance from several large banks increasing the minimum threshold exposure that would require a bank loan rating. The securitisation market continues to see buoyant issuances on the back of investor preference for securitisation in a cautious environment and partial credit enhancement (PCE) scheme announced by the government.

On the regulatory front, the Securities and Exchange Board of India (SEBI) announced a series of changes aimed at higher disclosure by credit rating agencies (CRAs), in the interest of investors. It brought in standardization in monitoring and recognition of defaults and also prescribed standardised and uniform probability of default (PD) benchmarks for all CRAs. SEBI has instructed CRAs to seek inputs directly from audit committees of issuers of listed securities they rate. It has also asked for greater disclosures from listed issuers on any defaults on their financial obligations.


Profit & Loss Statement

(Rs Crores)

Particulars CY 2017 CY 2018 CY 2019 CY 2020E CY 2021E CY 2029E
Net Sales 1658.46 1748.49 1731.72 1939.53 2172.27 6759.56
Growth% 7.20% 5.40% -1.00% 12.00% 12.00% 16.00%
Employee Cost 845.93 887.36 877.56 979.46 1097.00 3413.58
Other Expenses 357.25 389.90 398.32 446.09 488.76 1554.70
Total Expenditure 1203.18 1277.26 1275.88 1425.55 1585.76 4968.27
EBITDA 455.28 471.23 455.84 513.97 586.51 1791.28
Margin% 27.50% 27.00% 26.30% 26.50% 27.00% 27.00%
Depreciation 46.64 42.82 36.86 90.50 88.50 163.05
EBIT 408.64 428.41 418.98 423.47 498.01 1628.23
Other Income 25.38 73.41 72.84 88.95 85.60 105.60
Interest 0.41 2.23 0.23 12.00 12.00 11.00
Profit before tax 433.61 499.59 491.59 500.42 571.61 1722.83
Provision for Tax 129.18 136.49 147.64 125.11 142.90 430.71
Tax rate% 29.80% 27.30% 30.00% 25.00% 25.00% 25.00%
PAT 304.43 363.10 343.95 375.32 428.71 1292.12
Margin% 18.40% 20.80% 19.90% 19.40% 19.70% 19.10%
EPS 42.46 50.36 47.57 51.77 59.13 178.22
Source: Stockaxis Research, Company Data

Balance Sheet

(Rs Crores)

Description CY 2017 CY 2018 CY 2019 CY 2020E CY 2021E CY 2029E
Share Capital 7.17 7.21 7.23 7.23 7.23 7.23
Reserve 1041.40 1129.04 1164.69 1205.87 1394.30 2565.80
Shareholder's Funds 1048.57 1136.25 1171.92 1213.10 1401.53 2573.03
Non financial Liabilities 221.00 221.00 129.00
Financial Liabilities 17.48 21.58 23.00 23.00 23.00
Total Liabilities 1066.05 1157.83 1194.92 1457.10 1645.53 2702.03
Fixed Assets 306.67 357.37 360.68 761.00 793.78 1345.00
Investments 585.88 577.73 572.75 560.87 620.10 795.00
Sundry Debtors 260.42 284.83 199.37 252.14 304.12 878.74
Cash and Bank 131.78 207.00 345.58 185.00 259.40 449.25
Other Current Assets 175.22 150.07 166.96 174.56 217.23 675.96
Total Current Assets 567.42 641.90 712.71 611.70 780.72 2003.95
Total Current Liabilities 428.67 475.93 493.81 533.37 564.79 1487.10
Net Current Assets 138.75 165.97 218.90 78.33 215.93 516.84
Deferred Tax Assets / Liabilities 34.75 56.76 42.59 56.90 15.72 45.19
Total Assets 1066.05 1157.83 1194.92 1457.10 1645.53 2702.03

Cash Flow Statement

(Rs Crores)

Description CY 2017 CY 2018 CY 2019 CY 2020E CY 2021E CY 2029E
Profit Before Tax 433.61 499.59 491.59 500.42 571.61 1722.80
Adjustment 57.01 71.14 16.28 13.55 14.90 68.45
Depreciation 46.64 42.82 36.86 90.50 88.50 163.05
Interest Expenses 0.41 2.23 0.23 12.00 12.00 11.00
Other Adjustments 9.96 26.09 -20.81 -88.95 -85.60 -105.60
Changes In working Capital -32.28 -23.40 83.51 -20.81 -63.23 -67.60
Cash Flow after changes in Working Capital 458.34 547.33 591.38 493.17 523.28 1723.69
Cash From Operating Activities 290.71 378.52 445.86 368.06 380.38 1292.98
Cash Flow from Investing Activities -176.66 -73.07 -70.97 -299.49 -6.41 -70.40
Cash from Financing Activites -186.58 -201.98 -228.94 -222.68 -299.60 -992.00
Net Cash Inflow / Outflow -72.53 103.47 145.95 -154.11 74.37 230.58
Opening Cash & Cash Equivalents 163.91 88.69 199.49 339.11 185.00 218.67
Closing Cash & Cash Equivalent 88.69 199.49 339.11 185.00 259.40 449.20


CRISIL is India’s leading credit rating company having a ~35% revenue market share and we expect this market share to increase further supported by introducing innovative products and rating instruments, providing top notch industry research & analytics and continuous investments in new platforms and solutions. Further we note that it has a strong parentage in the form of Standard & Poor (S&P), who is the world's leading credit rating agency by market share. We expect that CRISIL’s investment in people and technology over the years will ensure seamless operations helping them deliver growth in an uncertain and difficult environment. Further, we expect Greenwich acquisition to boost overall revenues and deepen relationships with customers helping cross sell of other segment products. The company has maintained a good ROE of ~30% from the past 3 years.