CRISIL Limited Analyst Call Summary (April 19, 2024)
Compliance and Overview
• Transcript communicated to National Stock Exchange of India and BSE Limited.
• Key executives present: Managing Director and CEO Amish Mehta, CFO Sanjay Chakravarti.
Company Performance Highlights
• Resilience and Culture: Emphasis on a people-first culture and diversity.
• Macroeconomic Outlook:
• Global GDP growth moderation noted.
• Projected India's GDP growth at 6.8% for fiscal 2025.
• Business Growth: Strong performance in ratings and analytics; ongoing investments in digital technology.
Financial Performance
• 2023 Results:
• Revenue growth of 13.4%.
• Profit Before Tax (PBT) increased by 17%.
• Profit After Tax (PAT) increased by 16.7%.
• Q1 2024 Results:
• Revenue growth slowed to 3.2%.
• PAT declined by 5.5% due to increased tax rates.
Segment Insights
• Ratings Segment:
• 9% growth in corporate bond market.
• 6.3% increase in bank credit.
• Sluggish capital market issuances expected.
• Market Intelligence and Analytics:
• Improved asset quality in banks.
• Increased demand due to digitization.
• Global Benchmarking and Analytics:
• Stagnation in revenue pools for global banks.
• Double-digit revenue growth achieved in 2023.
• Global Risk and Research Solutions (GRRS):
• Robust performance despite macroeconomic challenges.
• Increased client engagement in regulatory compliance.
Risks and Opportunities
• Key Risks: Geopolitical tensions, cyber threats, currency fluctuations, generative AI implications.
• Opportunities: Enhancing efficiency and exploring new business avenues.
Strategic Focus
• Emphasis on annual margins over quarterly fluctuations.
• Commitment to growth despite global uncertainties.
• Ongoing collaboration with S&P Global post-merger with IHS Markit.
Research Analytics and Solutions Segment
• Components:

Domestic Non-Ratings Research: Market Intelligence and Analytics for the Indian economy.
Global Benchmarking: Services for corporate and commercial banks.
Global Research and Risk Solutions: Research for global buy-side and sell-side firms.

Future Outlook
• Focus on operating leverage, productivity improvement, and technology investment.
• Monitoring competitive landscape in sovereign credit ratings and research sector impacts from M&A activity.
Conclusion
• Commitment to provide further insights on the research business in future communications.

Communication Overview
• CRISIL Limited shared the transcript of their Analyst Call with the National Stock Exchange of India and BSE Limited.
• Key executives included Managing Director and CEO Amish Mehta and Chief Strategy Officer Priti Arora.
• The call focused on Q1 2023 growth amidst market uncertainties and included a presentation and Q&A session.
Company Resilience and Growth
• Amish Mehta emphasized CRISIL's resilience during global uncertainties in 2022 and early 2023.
• CRISIL is a leading global analytics company with a diverse workforce of 4,700 employees across 12 countries.
• Economic outlook includes a slowdown in global GDP growth, with a projected 6% growth for India's GDP in fiscal 2024.
Financial Performance
• CRISIL reported double-digit revenue growth and robust margins, aided by the acquisition of Peter Lee Associates.
• Q1 2023 saw a 14% increase in profit before tax and a 20% increase in profit after tax.
• The ratings segment experienced a 16.1% growth in Q1 2023, driven by recovery in the corporate bond market.
Market Intelligence and Analytics
• Ashish Vora discussed the MI&A segment, focusing on financial and non-financial data and risk solutions.
• The segment serves a diverse clientele, driven by economic growth and digitization efforts in banks.
International Business Growth
• Andre Cronje highlighted a 23.2% revenue growth in global benchmarking and risk solutions.
• Current global uncertainties present opportunities for CRISIL's services in regulatory compliance and sustainability.
Key Risks and Challenges
• Sanjay Chakravarti outlined risks including currency fluctuations, cybersecurity threats, and rising personnel costs.
• Concerns were raised about margin stability in the research analytical and solution segment.
ESG Ratings and Market Dynamics
• Amish Mehta addressed growth opportunities in the ESG ratings market amid evolving regulatory landscapes.
• Gurpreet Chhatwal discussed the competitive nature of the rating agency market and pressures on pricing.
Employee Costs and Margin Management
• Rising employee costs were noted, with a focus on managing costs through natural attrition.
• The company prioritizes margin preservation while investing in talent and technology.
Strategic Focus and Future Outlook
• The call concluded with discussions on the strategic development of risk analytics and solutions.
• Emphasis on maintaining strong margins and exploring opportunities in Basel IV regulations and non-financial risk services.
Closing Remarks
• Amish Mehta expressed optimism about the Indian economy and demand for CRISIL's offerings.
• The call ended with gratitude to participants for their engagement.