Crisil reported 1% decline in the consolidated net sales to Rs 464.29 crore for quarter end December 2019. Rating service business revenues which constitute around 30% of total revenue were flat on YoY basis at Rs 141.48 crore, while research services revenues which forms around 62% of total revenue, were also flat at Rs 288.81 crore. Advisory service business revenues declined 7% to Rs 34.00 crore.

OPM was higher by 44 bps to 26.2%, helping to the OP to increase 1% to Rs 121.54 crore. The Rating service business segmental PBIDT margin jumped to 44% as compared to 40% for December 2018 quarter and PBIDT thus moved up 11% to Rs 62.64 crore. Research segment PBIDT stood at Rs 61.91 crore down by 21%, with margins showing decline to 21% as compared to 27% YoY. Advisory service segment reported a segmental PBIDT of Rs 2.56 crore as compared to negative PBIDT of Rs 11.37 crore for December 2018 quarter.

Other income has dipped by 32% at Rs 19.96 crore for December 2019 quarter. Depreciation was down by 20% to Rs 9.33 crore. PBT stood at Rs 132.10 crore down by 4%. After providing total tax of Rs 36.77 crore, up by 59% on YoY basis, consolidated PAT for December 2019 quarter of the company declined 16% to Rs 95.33 crore.

Other updates

During 2019, the company paid three interim dividends totaling Rs 19 per equity share of face value of Re 1 each. The Board of Directors has recommended a final dividend of Rs 13 per share (of Re 1 face value). The total dividend for the year works out to Rs 32 per share.

The Research segment performance in the quarter and the full year was led by Coalition, which saw robust traction in client and competitor analytics. Coalition continued its initiatives aimed at enhancing market relevance and broadening its reach to include more regional players.

The India Research business saw growth in funds and fixed-income research by leveraging its proprietary data and analytics platform Quantix for asset and wealth managers, and institutional investors. But the segment's performance was affected by changing demand in the risk and analytics space, with the global financial services sector preparing itself for the next wave of regulations.

The company continued to invest in augmenting talent pool and in new technologies to meet changing demand of clients.

During the quarter, CRISIL executed definitive agreements to acquire Greenwich Associates LLC and the transaction is expected to be completed over the next couple of months subject to customary closing conditions and approvals.

For the full year, the Advisory segment grew on the back of new wins in the credit risk, regulatory reporting and business analytics space in addition to new mandates from government and multilaterals in the infrastructure space.

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

During the previous quarter ended September 2019, the Group had received Rs 20.93 crore from sale of duty free saleable scrips received pursuant to the Service Export Incentive Scheme (SEIS) of the Directorate General of Foreign Trade, Government of India and Rs 24.93 crore in the quarter ended December 2018. This is included under' Other income' in the financial results.

During the previous quarter ended September 2019, the Company had received dividend income from its subsidiaries aggregating Rs 47.08 crore, included in 'Other Income' in the standalone financials results.

The Company elected to exercise the option permitted under section 115BAA of the Income Tax Act, 1961, as introduced by Taxation Laws (Amendment) Ordinance, 2019. Accordingly, the Company has recognized the provision for income tax for the period ended December 2019 using the revised effective tax rate, calculated basis the new tax rate of 25.17%, as applicable for the entities in India including re-measurement of deferred tax asset. The impact of this change is recognized in the statement of profit and loss for the quarter ended September 2019.

The consolidated financial results include additional provision for receivables of Rs 12.79 crore and Rs 16.84 crore during the quarter and year ended December 31, 2018 respectively, in the Advisory services segment, which is included under ‘Other expenses'.

On 19 December 2019, CRISIL Irevna US LLC, a wholly owned subsidiary company, has entered into a definitive agreement to acquire 100% of the equity share capital of Greenwich Associates LLC (‘Greenwich'), a company based in Stamford, USA, and its subsidiaries, a leading provider of proprietary benchmarking data, analytics and qualitative, actionable insights that helps financial services firms worldwide measure and improve business performance. The acquisition will complement CRISIL's existing portfolio of products and expand offerings to new segments across financial services including commercial banks and asset and wealth managers. The transaction is at a total consideration of US$ 40 million (Rs 280 crore approximately).