D R Dogra, Managing Director & CEO and Rajesh Mokashi, Deputy Managing Director addressed the call

Highlights of the call:

For the quarter ended December 2013 total income grew 13.3% to Rs 60.55 crore against Rs 53.46 crore.

Rating income grew 17%. It also benefited from bank facilities and bank segment.

Volumes grew despite slowdown.

EBITDA grew 1% to Rs 39.18 crore against Rs 38.78 crore

EBITDA was 65%.

Net profit improved 0.7% to Rs 28.02 crore against Rs 27.82 crore

In Q3 number of assignments grew 14.1% to 1772.

For the nine months ended December 2013, total income grew 16.4% to Rs 181.57 crore against Rs 156 crore

Improvement in total income was enabled by ongoing surveillances of ratings and acquiring fresh ratings.

EBITDA improved 11% to Rs 123.15 crore against Rs 110.63 crore

Net profit enhanced 12.4% to Rs 87.37 crore against Rs 77.72 crore

During 9m FY14, rating income improved by 12.9%. The growth was driven by expansion in the number of bank facilities rated from 3,838 in 9m FY13 to 4,414 in 9m FY14 and number of debt instruments from 221 in 9m FY13 to 236 in 9m FY14.

The volume of debt rated increased from Rs 4.80 lakh crore to Rs 6.45 lakh crore during 9m FY14, growth of 34.4%. The total number of assignments increased by 13.6% to 5,444 in 9m FY14 as against 4,790 in 9m FY13.

The other component of total income, ‘other income' (Rs 6.71 crore), which also includes income from tax efficient investments made in fixed maturity plans (FMPs) increased from Rs 20.53 crore in 9m FY13 to Rs 27.77 crore in 9m FY14.

Higher expenses were mainly on account of employee additions, increased provision for variable pay of employees and commencement of new offices at 4 locations.

Expenses as a percentage of total income stood at 33.3%.

PAT margins lowered to 48.1% in 9m FY14 over 49.8% 9min FY13.

CARE's performance was affected by the overall macroeconomic conditions and capital market activity.

Economic conditions have been subdued with the GDP growth in Q2 coming in at 4.8% and GDP in H1 FY14 growing at 4.6%. Industry growth has been deteriorating, with IIP registering a negative growth of 0.2% in April – November FY14 as against a positive growth of 0.9%.

Debt market remained subdued in FY14. Total debt raised between April – December FY14 remained lower at Rs 196,440 crore as against Rs 264,045 crore in the same period FY13.

Inflation numbers have been high since Q2 FY14, resulting in a hawkish RBI policy stance, however some relief was provided by the December inflation numbers.

In December 2013 quarter, the company has achieved notable growth in its performance in what continued to be a very tough period for the Indian economy. Its financial and operational parameters continue to strengthen showcasing the proficiency of its business model and increasing brand salience.

Concerted expansion of business development team and unwavering confidence in CARE's risk opinions continues to aid volume trajectory. A significant development was the launch of ARC Ratings its international CRA. This is a significant milestone towards growing its business and brand footprint in the global arena.

ARC offers a more comprehensive and pragmatic view on credit risk; and is registered with ESMA (European Securities and Markets Authority), thus complying with strict regulation standards.

Distributing value to shareholders is a corporate philosophy. Given the continuous generation of healthy free cash flows, this would be the fifth consecutive quarter where the board has declared interim dividend.

The Rs 6 per share dividend declared in December 2013 quarter added to a total dividend of Rs 18 per share for the nine months ended December 2013 amounting to a strong payout ratio of 69.5%..

In the coming quarters, the management expects subdued macros impacting industrial activity and the credit rating sector resultantly. However, it continues to be comfortable about the future as it has built the foundation for a strong and lasting company that brings a distinctive approach to the credit rating sector. The management is confident that the company is well-poised to navigate through the economic headwinds and capitalize on the anticipated tailwinds.

Its superior business model, growing brand equity, human capital efficiencies, expansive distribution network and strong financial position provides solid underpinnings for sustainable growth.

The company added 2206 new clients during the nine months ended December 2013.

The company sees credit growth picking up. Growth in April to 27 December 2013 stood at 9.4% against 9.0%.

Investments of Rs 3.84 lakh crore on infrastructure announced can provide boost to the debt rating market during the second half, however implementation of investments will be a key challenge.

Rating coverage of bank loans is expected to continue to grow.

Credit policy growth target of 15% is likely to be realized in FY 2014.

The company has relationship with over 7469 clients.

Significant annual cash flow generation enabling strong cash on books of Rs 441 crore.

This provides sizable platform to deliver future growth. The company is evaluating organic and inorganic opportunities to create value.

As on Dec 2013 it had net worth of Rs 495.6crore.

If inflation continues to fall, interest rates will also fall and investments will increase.