CRISIL completed the acquisition of 100% stake in Greenwich Associates LLC (USA) and its subsidiaries (‘GA'), on 26 February 2020, at a total value of US$ 40 million, which includes upfront and deferred consideration. The provisional accounting of purchase price allocation has been done during the current quarter. The results for the current quarter includes a revenue of Rs 9.7 crores and post-tax loss of Rs 9.1 crores, attributable to GA for the period 26 February 2020 to 31 March 2020.

Excluding Greenwich Associates LLC (Greenwich), consolidated total income increased 7% and net profit surged 27% for the quarter ended March 2020.

Crisil reported 3% growth in the consolidated net sales to Rs 427.77 crore for quarter end March 2020. Rating service business revenues which constitute around 31% of total revenue rose 3% YoY basis at Rs 133.1 crore, while research services revenues which forms around 62% of total revenue, increased 8% to Rs 264.38 crore. Advisory service business revenues (7% of revenues) dipped 26% to Rs 30.21 crore.

OPM was lower by 150 bps to 26.0%, causing 3% decline in the OP to Rs 111.11 crore. The Rating service business segmental PBIDT margin jumped to 43% as compared to 37% for March 2019 quarter and PBIDT thus moved up 21% to Rs 57.57 crore. Research segment PBIDT stood at Rs 55.69 crore down by 12%, with margins showing decline to 21% as compared to 26% YoY. Advisory service segment reported a segmental PBIDT of Rs 0.72 crore as compared to negative PBIDT of Rs 4.14 crore for March 2019 quarter.

Other income has zoomed 392% driven by forex gains to Rs 34.85 crore for March 2020 quarter. Depreciation jumped 184% to Rs 25.6 crore and interest expenses zoomed to Rs 3.33 crore. PBT stood at Rs 116.77 crore up by 4%. After providing total tax of Rs 28.65 crore, lower by 20% on YoY basis, consolidated PAT for March 2020 quarter of the company increased 15% to Rs 88.12 crore.

Other updates

The company has declared first interim dividend of Rs 6 per share (of Re 1 face value) for the financial year ended December 2020.

The Ratings business maintained its growth momentum posting 14.6% year-on-year growth in revenue, driven by investor preference for best-in-class ratings, concerted effort towards new client acquisition, and continued traction in securitisation transaction ratings. The quarter saw new corporate groups becoming clients, and wins for independent credit evaluation offerings. Global Analytical Center (GAC) continued to play a crucial role in supporting key stakeholder S&P Global Ratings. Roles were added on the back of new assignments and continued support to S&P Global Ratings on its Environmental, Social, Governance (ESG) offerings.

Research, the largest segment for CRISIL, grew its revenue 7.7% following a recovery in the Global Research & Analytics (GR&A) business, which was impacted last year because of changing demand in the risk services industry. Model and traded risk offerings saw good traction with new project wins in the US and Europe. Growth in the India Research business was supported by the launch of new reports in industry research and an investment research module on Quantix, an integrated data and analytics platform. Coalition continued to see growth for its industry-leading client and competitor benchmarking analytics by expanding client relationships across the US, Asia and Europe.

CRISIL completed the acquisition of Greenwich Associates LLC (Greenwich) on February 26, 2020. The Research segment's numbers, therefore, include pro rata performance of Greenwich. Excluding Greenwich, the research segment registered revenue growth of 3.8%, with a segmental profit growth of 3.3%.

While the Advisory segment saw client wins in both Infrastructure Advisory and Risk Solutions, the slowdown in spending in India and delays in closure of contracts impacted performance during the quarter.

In the wake of the pandemic, CRISIL proactively took measures to safeguard the health and interest of employees and all its stakeholders. Work-from-home was initiated for almost all employees across locations by ensuring remote connectivity and technology support. All businesses remain fully functional, serving the large and diversified client base worldwide as well as regulators and policymakers. CRISIL also launched a dedicated microsite to provide timely analyses and updates on Covid-19, including its impact on the economy, credit profiles, and sectors. A raft of impact reports, credit alerts and press releases on this theme have also been published. Whitepapers on Bank of England's stress test results, and climate risk quantification, were also published.

Consolidated Performance – Year ended December 2019

Consolidated income from operations was Rs 1731.7 crore for the year ended December 2019, compared with Rs 1748.5 crore in the previous year. Consolidated total income was Rs 1814.5 crore, compared with Rs 1831.7 crore in the previous year. Profit after tax was Rs 344.0 crore, compared with Rs 363.1 crore in the previous year.

Rating service business which constitute around 30% of total revenue was up by 7% on YoY to Rs 544.81 crore, while Research services which forms around 60% of total revenue, was down by 6% YoY to Rs 1044.40 crore. Advisory service business was higher by 5% to Rs 142.51 crore.

OPM however was lower by 65 bps to 25.7% which resulted in OP fall of 3% to Rs 445.86 crore.

The Rating service business segmental PBIDT margin stood at 40% as compared to 36% for year ended December 2019 and PBIDT thus stood at Rs 219.54 crore, up by 19% YoY. Research segment PBIDT stood at Rs 233.68 crore, down by 28% on YoY basis, with margins declining to 22% from 30%. Advisory service segment reported a segmental profit at PBIDT of Rs 12.73 crore with PBIDT margin at 9%.

Other income was flat at Rs 82.82 crore. Depreciation was down by 14% to Rs 36.86 crore. PBT declined 2% to Rs 491.59 crore. After providing total tax of Rs 147.64 crore, up by 8%, consolidated PAT for year ended December 2019 of the company fell 5% to Rs 343.95 crore.

Notes

The Group has adopted Ind AS116 effective 1 January 2020, using the modified retrospective method and has applied the standard to its leases with the cumulative impact recognized on the date of initial application i.e. 1 January 2020. Accordingly, previous period information has not been restated. The lease expenses which were recognized as rent expense in previous periods is now recognized as depreciation expense for the right-of-use asset and finance cost for interest accrued on lease liability. The Group has elected not to recognize right-to-use assets and lease liabilities for short term leases (lease term of 12 months or less) and leases of low-value and has recognized the lease payments for such leases as an expense over the lease term. The transition has resulted in recognition of Right-of-Use (ROU) assets of Rs 156.02 crore and Rs 220.78 crore and Lease Liability of Rs 150.91 crore and Rs 221.37 crore in standalone and consolidation books respectively. The cumulative effect of applying the standard resulted in Rs 6.90 crore and Rs 11.45 crore being debited to retained earnings (net of taxes) in unaudited standalone and consolidation financial results respectively. The adoption of this standard did not have any significant impact on the profit after tax and earnings per share on the current financial results.