Brokerage house Yes Securities is bullish on CRISIL, a part of Big Bull's portfolio. It has a 'Buy' rating on the stock with a target price of Rs per 4,100 share.
The stock opened a tad higher at Rs 3,381.10 against the previous close of Rs 3,342.60. With a market cap of more than Rs 24,000 crore, the shares stand higher than 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
The brokerage firm highlighted that the strong growth performance was driven by improved growth momentum in the domestic rating business, sustained traction in the GR and RS business underpinned by strong demand for core offerings in research, risk, regulatory support, and transformation, capabilities to tap new opportunities and new client additions, strong performance of India Research business on continued buoyancy in capital markets and economic recovery and an integrated approach in GBA business driving wallet share gains within key clients and new client additions.
Yes Securities has also raised the earnings estimates by 4-5 per cent across CY22-24 by lifting growth and margin assumptions on the back of strong performance delivery in Q1 CY22 and positive management commentary about concurrent trends in market or wallet share in various businesses and readiness or capabilities to tap evolving opportunities.
"We estimate 15 per cent or 23per cent consolidated revenue or PBT CAGR over CY21-24 and ~400 bps margin expansion through the period. Improved margin and growth will cause RoE to expand by six ppt to 38 per cent in CY24," it said.
It noted that the stock trades at 41x 1-yr rolling fwd. P/E, and its peak valuation has been around 55x in the past seven years. Multiple is expected to re-rate on prospects of substantial RoE expansion, it added.
The company posted a net profit of 121.62 crore for the quarter ended March 2022, up 46 per cent as against Rs 83.52 crore during the previous quarter ended March 2021.
Net sales rose 20 per cent to Rs 594.94 crore in the quarter ended March 2022 as against Rs 495.20 crore during the previous quarter ended March 2021.
According to the shareholding pattern for March 2022, Rakesh Jhunjhunwala holds a 2.89 per cent stake or 21,06,750 shares in the company. Big Bull's wife Rekha Jhunjhunwala holds 2.57 per cent stake or 18,68,250 shares in CRISIL.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today