1QCY2012 Result Update | Credit Rating

April 16, 2012

CRISIL
Performance Highlights
Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 1QCY2012 1QCY2011 229.7 82.2 35.8 57.0 178.8 58.3 32.6 46.0 %chg (yoy) 4QCY2011 28.5 41.0 317bp 23.9 224.6 80.0 35.6 55.8 %chg (qoq) 2.3 2.8 18bp 2.0

NEUTRAL
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Credit Rating 7,491 0.6 1150/648 16,717 1 17,151 5,226 CRSL.BO CRISIL@IN

`1,069 12 Months

Source: Company, Angel Research

For 1QCY2012, CRISILs net sales grew by 28.5% yoy to `230cr. The company reported a 317bp yoy expansion in OPM to 35.8%. Net profit increased by 23.9% yoy to `57cr. We continue to remain Neutral on the stock. Top line posts strong growth, EBITDA margin expands: For 1QCY2012, CRISILs top line reported 28.5% yoy growth to `230cr, led by strong growth in its rating segment, which witnessed 40.1% growth backed by strong growth in the bank loan rating segment. The company rated nearly 1,100 entities during 1QCY2012 vs. 2,700 entities in CY2011. The research segment continued its strong growth during the quarter, registering 22.9% yoy growth. The advisory segment also witnessed an increase in its revenue, registering 18.9% yoy growth. The companys EBITDA margin expanded by 317bp yoy, largely due to lower staff cost, which declined to 40.6% of sales in 1QCY2012 from 43.7% of sales in 1QCY2011. Net profit came in at `57cr, up 23.9% yoy; while margin contracted by 92bp yoy to 24.8%, largely due to increased tax rate. CRISILs tax rate increased to 28.1% of PBT in 1QCY2012 vs. only 15.1% of PBT in 1QCY2011. Outlook and valuation: We expect CRISIL to post a 17.2% CAGR in revenue and 16.5% CAGR in PAT over CY2011-13 and continue to maintain its leadership position. Despite the recent buy back, the stock is available at rich valuation of 26.7x CY2013E earnings, which is at the higher end of its historical range of 16.4x-29.9x and five-year median of 22x one-year forward EPS. We continue to maintain our Neutral recommendation on the stock.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 53.1 16.6 11.1 19.2

Abs. (%) Sensex CRISIL

3m 6.2 16.4

1yr (11.5) 56.5

3yr 55.6 279.8

Key financials (Consolidated)

Y/E Dec. (` cr) Net Sales % chg Net Profit % chg EPS (`) EBITDA Margin (%) P/E (x) RoE (%) RoCE (%) P/BV (x) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

CY2010 631 17.5 160 (0.2) 29.0 34.5 36.9 49.6 47.4 19.2 11.6 33.7

CY2011 827 31.1 206 28.6 29.5 34.2 36.3 51.1 62.6 18.1 8.7 25.6

CY2012E 982 18.7 241 16.5 34.3 34.3 31.1 50.9 64.6 14.1 7.2 21.0

CY2013E 1,136 15.8 280 16.4 40.0 34.3 26.7 46.9 59.8 11.3 6.1 17.7

Sharan Lillaney
022-3935 7800 Ext: 6811 sharanb.lillaney@angelbroking.com

Please refer to important disclosures at the end of this report

CRISIL | 1QCY2012 Result Update

Exhibit 1: 1QCY2012 Performance highlights

Particulars (` cr) Net Sales Total Expenditure EBITDA OPM (%) Depreciation EBIT Interest Other Income PBT Tax Exceptional Items Net Profit NPM (%) Net Profit Adj. for other Income EPS (`)
Source: Company, Angel Research

1QCY2012 229.7 147.5 82.2 35.8 7.8 74.4 4.8 79.2 22.2 57.0 24.8 52.2 8.1

1QCY2011 178.8 120.4 58.3 32.6 6.8 51.5 2.6 54.2 8.2 46.0 25.7 43.4 6.5

%chg (yoy) 28.5 22.5 41.0 317bp 15.4 44.4 81.8 46.2 171.4 23.9 (92)bp 20.4 25.5

4QCY2011 224.6 144.6 80.0 35.6 8.3 71.7 9.1 80.8 24.9 55.8 24.9 46.8 8.0

%chg (qoq) 2.3 2.0 2.8 18bp (5.3) 3.7 (47.2) (2.0) 2.0 (6.4)bp 11.6 2.0

CY2011 827.2 544.5 282.7 34.2 29.8 252.9 22.6 275.5 69.1 206.4 25.0 183.8 29.5

CY2010 631.1 413.3 217.7 34.5 21.3 196.5 70.4 266.9 58.7 (2.7) 205.5 32.6 135.0 29.0

%chg (yoy) 31.1 31.7 29.9 (32)bp 40.3 28.7 (67.9) 3.2 0.5 (761)bp 36.1 1.8

Revenue up 28.5% yoy due to strong growth in rating segment

For 1QCY2012, CRISIL registered 28.5% yoy growth in its revenue to `230cr, led by strong growth in its rating segment, which witnessed 40.1% growth on the back of strong growth in the bank loan rating segment. The company rated nearly 1,100 entities in 1QCY2012 vs. 2,700 entities in CY2011. The research segment continued its strong growth during the quarter, registering 22.9% yoy growth to `115cr. The advisory segment also witnessed an increase in its revenue, registering 18.9% yoy growth to `13cr.

Exhibit 2: Strong yoy growth in revenue continues

(` cr) 250 200 150 100 50 0 1QCY2011 2QCY2011 Net Sales (LHS)
Source: Company, Angel Research

(%) 45 220 225 230 40 35 30 25 20 15 10 5 0 3QCY2011 4QCY2011 1QCY2012 Growth (qoq) Growth (yoy)

204 179

April 16, 201

CRISIL | 1QCY2012 Result Update

EBITDA improves, margins up

For 1QCY2012, EBITDA increased by 41.0% yoy to `82cr on the back of higher revenue and margin expansion. OPM improved on a yoy basis to 35.8% due to lower employee cost, which declined to 40.6% of sales in 1QCY2012 compared to 43.7% of sales in 1QCY2011.

Exhibit 3: OPM trend

(%) 45

40

38.1 35.6 35.8

35

32.6 29.7

30

25 1QCY2011 2QCY2011 3QCY2011 4QCY2011 1QCY2012

Source: Company, Angel Research

PAT increases by 23.9%, but PAT margin declines

For 1QCY2012, PAT increased by 23.9% yoy to `57cr on account of higher revenue and OPM expansion during the quarter. Despite OPM expansion, PAT margin contracted by 92bp yoy to 24.8%, largely due to increased tax rate. CRISILs tax rate during the quarter increased to 28.1% of PBT vs. only 15.1% of PBT in 1QCY2011.

Exhibit 4: PAT trend

(` (` cr) 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 46.0 1QCY2011 44.4 2QCY2011 60.2 3QCY2011 55.8 4QCY2011 NPM (RHS) 57.0 1QCY2012 25.7 21.8 27.3 24.9 24.8 (%) 30 25 20 15 10 5 0

Net Profit (LHS)

Source: Company, Angel Research

April 16, 201

CRISIL | 1QCY2012 Result Update

Outlook and valuation

We expect CRISIL to post a 17.2% CAGR in revenue and 16.5% CAGR in PAT over CY2011-13 and continue to maintain its leadership position. Despite the recent buy back, the stock is available at rich valuation of 26.7x CY2013E earnings, which is at the higher end of its historical range of 16.4x-29.9x and five-year median of 22x one-year forward EPS. We continue to maintain our Neutral recommendation on the stock.

April 16, 201

CRISIL | 1QCY2012 Result Update

Profit and loss statement (Consolidated)

Y/E Dec. (` cr) Total operating income % chg Total Expenditure Establishment Expenses Other Expenses Personnel Other EBITDA % chg (% of Net Sales) Depreciation& Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Adj.Other Income (% of PBT) Share in profit of Associates Recurring PBT % chg Extraordinary Expense/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) Add: Share of earnings of associate Less: Minority interest (MI) % chg Prior period items PAT after MI (reported) Extraordinary Income post tax ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg CY2009 CY2010 537 4.4 338 55 75 208 199 11.3 37.1 15 184 11.5 34.3 23 11.1 207 10.9 207 47 22.5 161 14.4 161 161 14.4 29.9 22.3 22.3 14.4 631 17.5 413 71 84 258 218 9.2 34.5 21 196 6.5 31.1 68 25.6 264 27.3 264 59 22.2 205 27.8 205 45 160 (0.2) 25.4 29.0 29.0 30.1 CY2011 827 31.1 544 78 115 352 283 29.9 34.2 30 253 28.7 30.6 23 8.2 275 4.3 275 69 25.1 206 0.5 206 206 28.6 25.0 29.5 29.5 1.8 CY2012E 982 18.7 645 107 135 402 337 19.1 34.3 32 305 20.6 31.1 20 6.2 325 18.0 325 85 26.0 241 16.5 241 241 16.5 24.5 34.3 34.3 16.5 CY2013E 1,136 15.8 747 124 157 466 390 15.8 34.3 32 358 17.2 31.5 21 5.5 379 16.4 379 98 26.0 280 16.4 280 280 16.4 24.7 40.0 40.0 16.4

April 16, 201

CRISIL | 1QCY2012 Result Update

Balance sheet (Consolidated)

Y/E Dec. (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Investments Current Assets Cash Loans & Advances Other Current Assets Debtors Other Current liabilities Net Current Assets DEFERRED TAX ASSETS (Net) Total Assets 184 64 120 64 118 323 158 62 11 92 200 122 10 434 310 85 225 0 26 343 161 51 22 109 214 129 14 394 342 115 227 16 443 258 54 44 88 285 158 13 413 349 147 202 16 617 405 59 46 108 317 300 13 531 356 179 177 16 819 581 65 48 125 360 459 13 664 7.2 427 434 434 7.1 387 394 394 7.0 406 413 413 7.0 524 531 531 7.0 657 664 664 FY2009 CY2010 CY2011 CY2012E CY2013E

April 16, 201

CRISIL | 1QCY2012 Result Update

Cash flow statement (Consolidated)

Y/E Dec. (` cr) Profit before tax Depreciation Change in Working Capital Less: Other income Direct taxes paid Cash Flow from Operations Inc./ (Dec.) in Fixed Assets Inc./ (Dec.) in Investments Inc./ (Dec.) in loans and advances Other income Cash Flow from Investing Issue/(Buy Back) of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2009 CY2010 207 15 16 23 47 169 (54) 1 (9) 23 (40) (85) (16) (101) 28 129 158 267 21 (14) 70 59 145 (62) 91 11 70 111 (79) (168) (5) (252) 4 158 161 CY2011 CY2012E CY2013E 275 30 71 23 69 284 (32) 10 (3) 23 (2) (79) (90) (17) (186) 96 161 258 325 32 10 20 85 262 (7) (5) 20 8 (123) (123) 147 258 405 379 32 24 21 98 316 (7) (6) 21 8 (147) (147) 177 405 581

April 16, 201

CRISIL | 1QCY2012 Result Update

Key ratios
Y/E Dec. Valuation Ratio (x) P/E (on FDEPS) P/E (on basic, reported EPS) P/CEPS P/BV Dividend yield (%) Market cap. / Sales EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis (%) EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Asset Turnover (Net Block) Asset Turnover (Total Assets) Operating Income / Invested Capital Inventory / Sales (days) Receivables (days) Payables (days) Working capital cycle (ex-cash) (days) Solvency ratios (x) Gross debt to equity Net debt to equity Net debt to EBITDA Interest Coverage (EBIT / Interest) 2.9 4.4 1.4 4.0 58 122 (21) 2.6 3.7 1.5 3.5 58 120 (19) 2.5 3.7 2.0 4.8 43 110 (29) 2.8 4.6 2.1 7.8 36 112 (38) 3.2 6.0 1.9 12.7 37 109 (36) 46.6 183.6 40.6 47.4 130.2 49.6 62.6 145.9 51.1 64.6 243.2 50.9 59.8 400.6 46.9 34.3 77.5 4.0 106.4 106.4 31.1 77.8 3.5 83.6 83.6 30.6 74.9 4.8 109.3 109.3 31.1 74.0 7.8 179.9 179.9 31.5 74.0 12.7 296.4 296.4 22.3 22.3 24.3 10.0 60.0 29.0 29.0 31.9 20.0 55.6 29.5 29.5 33.7 11.0 59.0 34.3 34.3 38.8 15.0 75.8 40.0 40.0 44.6 18.0 94.8 48.0 48.0 44.0 17.8 0.9 13.9 13.6 36.8 16.9 36.9 36.9 33.5 19.2 1.9 11.9 11.6 33.7 18.6 36.3 36.3 31.7 18.1 1.0 9.1 8.7 25.6 17.5 31.1 31.1 27.5 14.1 1.4 7.6 7.2 21.0 13.3 26.7 26.7 24.0 11.3 1.7 6.6 6.1 17.7 10.4 FY2009 CY2010 CY2011 CY2012E CY2013E

April 16, 201

CRISIL | 1QCY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

CRISIL No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

April 16, 201