Basic analysis of the crisis – future planning, finances, etc.
Crisil’s fundamental analysis: Credit rating agencies investigate a company’s credit rating and present it more clearly and transparently. These organizations conduct extensive research on companies and industries and determine where the company stands compared to its peers.
Among many organizations, we chose Crisil Ltd, which is the largest company. In this article, we will perform a fundamental analysis of Crisil and look at the company’s future prospects.
Fundamental Analysis of Crisil – Company Overview
chrysil is a globally diversified analytics firm that provides policy advisory services, with the primary focus of providing ratings after in-depth analysis. The company is majority owned by S&P Global Inc, the world’s leading credit rating provider.
The company helps in providing innovative solutions which are very essential for the organization in decision making process. Crisil is India’s premium rating agency, which has successfully evaluated over 35,000 companies ranging from large to mid-sized companies.
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Crisil is one of the leading rating agencies that provides services such as: Strategic Benchmarking, has a client base of over 300 worldwide. In terms of reach, the company operates in over 12 countries across the world with a 4700-strong employee base.
Crisil has a diverse customer base ranging from micro, small and medium enterprises (MSMEs) to large enterprises. This also includes top global financial institutions. The company also works with commercial and investment banks and other asset management firms at the international level.
Crisil helps businesses make more informed decisions regarding pricing and valuation decisions and also helps reduce the time period required for market timing.
Crisil’s Fundamental Analysis – Segment Analysis
As a company, Crisil has identified three business segments:
(1) Evaluation service
(2) Research analysis and solutions
(3) Consulting
Now let’s take a closer look at each segment.
(1) Evaluation service
Ratings services are one of the key services the company performs, so the performance in that segment looks impressive and healthy.
As of 2023, Crisil was able to announce 1,200 new bank loan ratings, a 20% increase over the previous year.
Sharp and focused analysis has enabled Crisil in the sector to maintain a strong market leader position in the corporate bond market while ensuring the quality of its ratings. It is the second largest contributor to Crisil’s overall revenue.
(2) Research analysis and solutions
In this segment, Crisil was able to launch 38 new bond indices to cater to mutual fund requirements and CRISIL AIF benchmark was also launched. The company has been able to secure large mandates from mutual funds, the World Gold Council, and others.
To keep the process innovative and up-to-date, Crisil has enhanced the features available in Alphatrax (asset tracking solution) to increase customer satisfaction.
The AIF benchmark continued the process throughout the year by including $850 billion worth of assets in the Crisil index. It remains the largest contributor to overall revenue.
(3) Consulting
Crisl in this segment has been able to fill its order book with large orders while increasing its market share in the international market. The company has been able to maintain strong traction in the infrastructure and transportation sectors. The larger share has enabled the sector to maintain its leadership position at the international level with multilateral and bilateral institutions.
Industry Overview
The credit rating industry in India mainly consists of six players: CRISIL, CARE, FITCH, ICRA, ONICRA and SMERA.
Credit rating agencies in India have been established since the 1980s and currently, all credit rating agencies in India are regulated by the Securities and Exchange Board of India (SEBI). Economic research is used to criticize the methodologies adopted by credit rating agencies. However, with time, credit rating agencies in India started adapting to the requirements.
The valuation industry as a whole has shown good growth in 2022 and 2023 compared to the previous years. Wholesale bank credit led by small and medium-sized businesses led to healthy growth.
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Fundamental Analysis of Crisis – Finance
Sales and Net Profit
Crisil’s income statement shows operating revenues increasing from $276.9 billion in fiscal 2022 to $314 billion in fiscal 2023. This is a 13.39% year-on-year (YOY) growth. As of fiscal 2022, Crisil’s net profit reached $56.4 billion. By 2023, it has increased to $658 million. The company’s sales and net profit have been gradually increasing over the past few years.
The company was able to achieve better returns from operations due to other factors such as the strength and increasing appetite in the Bank Loan Rating (BLR) market, which enabled it to issue over 1200 new BLRs in fiscal 2023. Indian banks credit rating agency This is also an added advantage.
The table below shows the company’s operating revenue.
profit
The company’s operating profit margin (OPM) increased from 26% in fiscal 2022 to 28% in fiscal 2023, according to the income statement. The company’s net profit margin is 20.96% in 2023. The company’s net profit margin for the previous fiscal year 2022 was 19.52%.
In fiscal 2023, the company’s operating profit margin (OPM) and net profit margin (NPM) both increased along with the company’s sales and earnings growth.
The table below shows the company’s operating profit margin and net profit margin.
rate of return
Return on equity (ROE) and return on capital employed (ROCE) are two important return metrics to look at. As of 2023, the company’s return on equity (ROE) is 33.1%. The average return on equity (ROE) for three years was 32%.
The company’s return on investment (ROCE) is 42.4%. The three-year average return on investment (ROCE) is 40.4%. As revenues and profits continue to improve each year, both the company’s return on equity and return on capital are improving, making it impressive and stable for investors.
The table below shows the company’s operating profit ROE and ROCE.
leverage ratio
As of 2023, Crisil’s debt ratio is 0.02, which is quite low. In fiscal year 2022, the company’s debt was at 0.06, and in fiscal year 2023, it has reduced its debt-to-equity ratio through repayments that helped bring the debt down to 0.02.
Additionally, the company’s interest coverage ratio was 117 times compared to fiscal 2018. It has increased by 238 times in 2023, which means that the company’s interest payments are safe. As the company’s debt ratio decreased, its interest coverage ratio also increased.
The table below shows the company’s debt-to-equity ratio and interest coverage ratio.
Crisil’s Fundamental Analysis – Key Indicators
Basic analysis of the crisis – future plans
- Crisil Company is well-known for providing independent and unbiased ratings that help it capture larger market share and aims to maintain its market leading position.
- Crisil is formulating a new plan for its bank lending business through appropriate strategies and fund allocation.
- To keep the sector more proactive, Crisil is providing risk solutions and consulting solutions especially in the areas of implementation and strategic planning and formulation. risk management.
Read more: Fundamental Analysis of Canara Bank
conclusion
To conclude the article “Fundamental Analysis of Crisil”, I will briefly outline it. Analyzed company profile, sector, industry overview and company plans. Please leave your thoughts in the comments section below.
Written by Nishanth P
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