Analyst: Sanjeev J ain

Email: sjain@microsec.in
Phone: 033-3051-2174
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Company Background









Experienced Board of Directors and Management Team:
The companys board of directors and management team are experienced in the Banking
and Financial services industry, Commerce and credit risk assessment. Several of general
managers have been with the company for over ten years. The knowledge and experience
of management team and Board of directors are able to response to market opportunities as
well as adapt to changes in the regulatory environment.

Strong Business Growth:
CARE has completed 19,058 rating assignments and has rated INR44,036.03 billion of debt
as of September 30, 2012 from April 1993. Volume of debt rated by the company increased
from INR4,325.84 billion as of March 31, 2008 to I NR9,268.61 billion as of March 31, 2012,
at a CAGR of 21.0% during such period. Moreover, management sound optimistic towards
the expansion of companys debt instrument and bank loan and facility rating business,
though the acquisition of new clients and the retention of existing clients by providing high
quality services.

Robust Growth in Profitability:
Companys Total Income and Profitability has been growing rapidly. Total Income
increased from ~INR54.9 crores in FY08 to ~INR217.2 crores in FY12, grown at a CAGR of
41.0% over same period. Whereas, Profit After Tax (PAT) has been grown at a CAGR of
44.3% to ~INR115.7 crores over the period of FY08-12. For the six month ended September
30, 2012, PAT stood at ~INR50 crores. Moreover, management optimistic stance towards
business expansion and growing business profitability has boosted our confidence.

Strong Rating Credibility and Brand:


Issues Details
Issue Opens 22-Feb-12
Issue Closes 24-Feb-12
Equity Offerings (In Mn) 64.27
Face Value 10.00
Price Band Rs. 860 - Rs. 1032
Issue Size (In Mn) Rs. 5527.5- Rs. 6633.1
Minimum Application Lot 6.00Shares
Issue Type Book Building
Listing BSE
IPO Grading 5/5 - CRISIL Limited
BRLMs Edel, Citi, M S
Registrar KARVY
Shareholding Pattern (%)
Post Issue
Promoter 31.18% 26.00%
Non Promoter 68.82% 61.40%
Public 0.00% 12.60%
Credit Analysis and Research Ltd (CARE) is the second largest rating company in India in
terms of rating turnover and have over 19 years of experience in rating debt instrument and
related obligations. The company offers a wide range of rating and grading services across a
diverse range of instruments and industries, and also provides general and customized
industry research reports. Since incorporation in April 1993, it has completed 19,058 rating
assignments and has rated INR44,036.03 billion of debt coupled with rating relationships
with 4,644 clients as of September 30, 2012. CAREs list of clients includes banks and other
financial institutions, private sector companies, central public sector undertakings, sub-
sovereign entities, small and medium enterprises (SMEs) and micro-finance institutions,
among others. CARE, being a credit rating company in India, is exempted by SEBI from
obtaining the IPO grading for its Initial Public Offer. None of the rating companies
including CRISIL, FITCH or ICRA graded CARE IPO.
Companys ratings business is supported by a strong team of skilled analysts and support
staff. Its analysts are predominantly post-graduate professionals, such as MBAs and other
finance professionals, which has made the companys brand. Moreover, ratings assigned by
the company show that a higher category of rating demonstrates a relatively lower
likelihood of default and a higher degree of stability. We believe, CAREs high rating
accuracy will help it to develop new client base and also in retention of the existing clients.

Subscribe
Analyst: Sanjeev J ain
Email: sjain@microsec.in
Phone: 033-3051-2174
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Microsec Research 5
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December 2012
The objects of the fresh issues are:






Note: All figures are in INR crores except per share data







To carry out the sale of 7,199,700 Equity Shares by Selling the Shareholders stake.
To achieve the benefits of listing the Equity Shares on the Stock Exchanges.
Any increase in interest rates and credit spreads may negatively impact the issuance of
debt instruments or demand for bank loans or facilities for which the company provides
rating services.
Demand for debt rating services is primarily linked to the issuance of debt instruments
and the provision of bank loans and facilities in the Indian debt market. Any
reduction in such volumes may adversely affect companys business, results of
operations and financial performance.

If the banks decide to rate their loan on internal rating based approach for credit risk
(the IRB Approach), it could have an adverse effect on companys rating business.

The company has made investment in bonds, debentures and other securities, Changes
in interest rates and volatility in the financial markets may adversely affect companys
income from such investments (which accounted for 12.2% of consolidated total
income as on six months ended September 30, 2012) and the market value of its
securities portfolio.
As on 31
st
March 2012
Analyst: Sanjeev J ain
Email: sjain@microsec.in
Phone: 033-3051-2174
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Microsec Research 5
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December 2012























Note:- All figures are in crores except per share data











Source: Company, Microsec Research
CARE is the third rating agency in the country to go public after CRISIL and ICRA. At the
upper price band of INR750 and lower price band of INR700, the issue of Credit Analysis
and Research Ltd is quoted at 21.4x on the upper side of the price band and 20x on the
lower price band on its annualized FY13 EPS of INR35. The rating business is trading at 33-
35x in the market. We believe that companys superior growth in profitability, high return
ratios, strong business credibility and brand and likely diversification will boost the
valuation multiples. We recommend investor Subscribe to the issue.
Analyst: Sanjeev J ain
Email: sjain@microsec.in
Phone: 033-3051-2174
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Microsec Research 5
th
December 2012