As we progress through 2024, CRISIL’s financial strength and strategic acumen shine through with the release of its unaudited financial results for the second quarter of 2024. This detailed analysis delves into the company’s impressive performance, highlighting key financial metrics, significant projects, strategic initiatives, and future outlook.
Key Financial Metrics
Income from Operations:
For Q2 2024, CRISIL’s consolidated income from operations increased by 3.4% to Rs 797.4 crore from Rs 771.0 crore in Q2 2023. For the half-year ending June 30, 2024, it rose 3.3% to Rs 1,535.0 crore compared to Rs 1,485.9 crore in the same period last year.
Total Income:
The consolidated total income for Q2 2024 was Rs 815.4 crore, a 3.4% rise from Rs 788.8 crore in Q2 2023. For H1 2024(Half Year), total income increased by 3.5% to Rs 1,574.2 crore from Rs 1,521.0 crore in H1 2023.
Profit Before Tax (PBT):
PBT for Q2 2024 stood at Rs 208.0 crore, up 6.7% from Rs 195.0 crore in Q2 2023. For H1 2024, it rose by 3.8% to Rs 403.5 crore from Rs 388.6 crore in the same period last year.
Net Profit:
The net profit for Q2 2024 was Rs 150.1 crore compared to Rs 150.6 crore in Q2 2023. For H1 2024, the net profit was Rs 287.8 crore, down from Rs 296.3 crore in H1 2023.
Earnings Per Share (EPS):
Basic and diluted EPS for Q2 2024 were Rs 20.53, while for H1 2024, they were Rs 39.36.
Key Wins and Projects
Revenue Growth in Ratings:
CRISIL Ratings reported a 10.7% growth in revenue for Q2 2024, maintaining its strong position in the corporate ratings market. This growth was driven by increased investor preference for high-quality ratings.
ESG Ratings Approval:
CRISIL ESG Ratings & Analytics Limited, a wholly owned subsidiary, received approval as a Category 1 provider of ESG ratings in India, marking a significant milestone in the company’s ESG initiatives.
Global Analytical Centre (GAC):
The GAC saw growth in the delegation of ratings surveillance work and increased demand for new areas of support from S&P Global.
Market Intelligence & Analytics (MI&A):
MI&A experienced traction for its credit, risk, data analytics, and consulting services. This segment added new clients during the quarter.
Recognition:
CRISIL was named a ‘Category Leader’ in Chartis RiskTech Credit Risk Management Solutions 2024 for both Banking Book and Trading Book categories.
Financial Statements Highlights
Income Statement:
- Revenue from operations for Q2 2024 was Rs 797.35 crore.
- Other income amounted to Rs 18.09 crore, bringing the total income to Rs 815.44 crore.
- Total expenses were Rs 607.48 crore, leading to a PBT of Rs 207.96 crore.
- After accounting for taxes (Rs 57.85 crore), the net profit for the period was Rs 150.11 crore.
Balance Sheet:
- Total assets as of June 30, 2024, were Rs 3,355.77 crore, with non-current assets at Rs 1,314.08 crore and current assets at Rs 2,041.69 crore.
- Total equity stood at Rs 2,247.10 crore.
- Total liabilities were Rs 1,108.67 crore, split between non-current liabilities (Rs 98.70 crore) and current liabilities (Rs 1,009.97 crore).
Cash Flow Statement:
- Net cash generated from operating activities was Rs 220.38 crore.
- Net cash used in investing activities was Rs 20.55 crore.
- Net cash used in financing activities was Rs 264.79 crore.
- Overall, there was a net decrease in cash and cash equivalents of Rs 64.96 crore, leaving a closing balance of Rs 301.23 crore.
Dividend Declaration:
An interim dividend of Rs 8 per share was declared for the financial year ending December 31, 2024.
Foreign Exchange Gains/Losses:
The financial results include details of foreign exchange gains and losses. For Q2 2024, the company recorded a forex loss of Rs 0.29 crore under other expenses.
Dividend Income from Subsidiaries:
CRISIL received Rs 67.50 crore in dividend income from its subsidiaries during Q2 2024, which is included under ‘Other income’ in the standalone financial results.
Regulatory Changes:
Following SEBI’s notification, CRISIL’s Board approved the transfer of its ESG rating business to a step-down subsidiary. This subsidiary received a license from SEBI to commence operations in April 2024.
Management’s Discussion and Analysis
Economic Overview:
Managing Director and CEO Amish Mehta highlighted that global GDP growth is robust, with the U.S. and India leading the way. Despite optimism, economic uncertainty has led to cautious discretionary spending by global clients. The Indian economy is projected to continue its growth trajectory, driven by investments in infrastructure, manufacturing, and services.
Business Performance:
The ratings business showed strong resilience with significant growth, whereas the Global Research and Risk Solutions (GR&RS) segment faced challenges due to reduced discretionary spending by global clients. However, there was momentum in lending solutions and regulatory support.
Strategic Initiatives:
CRISIL continues to focus on foundational capabilities through digital initiatives and people development, reinforcing its commitment to long-term value creation for stakeholders. The company is also deepening client engagement and developing new analytical solutions.
Market Position and Strategic Initiatives
Market Leadership:
CRISIL continues to maintain its leadership position in the ratings market, driven by a strong reputation for reliability and quality.
Innovation and Growth:
The company is focusing on innovation through digital transformation and expanding its service offerings in ESG and analytics. The strategic initiatives aim to strengthen its market position and explore new growth opportunities.
Conclusion
CRISIL Limited demonstrated resilience and growth in Q2 2024, despite global economic uncertainties. The company’s strong performance in the ratings business, strategic focus on innovation, and expansion in ESG and analytics positions it well for future growth. With robust corporate governance practices and strategic initiatives, CRISIL is poised to maintain its leadership position and drive long-term value for its stakeholders.
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