CARE :Credit Analysis and Research Limited : Fundamentally superstrong company buy at CMP of 1400-1460 1-2 year target Rs 2000

About Company:  Credit Research and Analysis Limited –CARE is second largest credit agency in India. CARE is 20 year old company which got listed in 2012.Company had then offered share AT Rs750 which got listed at around Rs925-950.Company has been performing well since listing in spite of weaker economic conditions and sentiments

Company recorded growth of 17% in total income from Rs 227 crore in FY13 to Rs 265 crore in FY14 and revenue touched Rs300 crore in 2015. Rating income increased from Rs 197 crore to Rs 257 crore during this period. Growth in credit rating business led to an increase in Profit after Tax (PAT) to Rs 140 crore in FY15 from Rs 113 crore in the 2013 year.  High PAT margin of ovr 49% is being maintained. Along with rising profits, company has also maintained a rising dividend pay-out ratio over the years .. The performance is further validated by expanding clientele which, increased inFY14 by 2,491 taking total number of clients up to 7,754 and further increasing to 9,828 in 2015.

CARE now has the highest share of clients in ET’s (Economic Times) Top 500 and BS (Business Standard) Top 1000 list for FY13 which augurs well for future prospects and referrals.

(in Cr.)	2015	2014	2013
Revenue	257.2	229.5	198.8
Other Income	43.56	35.66	28.63
Total Income	300.8	265.1	227.4
Expenditure	-95.14	-82.83	-64.88
Interest	-1.3	--	--
PBDT	204.3	182.3	162.5
Depreciation	-4.96	-2.89	-2.63
PBT	199.4	179.4	159.9
Tax	-59.05	-50.73	-46.55
Net Profit	140.3	128.7	113.3
Equity	29	29	28.55
EPS	48.39	44.71	39.69
CEPS	50.1	45.37	40.61
OPM %	79.95	79.44	81.76
NPM %	54.56	56.08	57.02
Dividend	81	26	26

 

Business for rating agencies is bound to pick up as investments increase in the economy. It can surprise on the performance in next 2-3 years which offers a great potential for this excellent company. Stock is not cheap currently available at PE multiple of 30 but in long term looking at growth potential it can easily cross 2000 in 1-2 year .Long term investor can buy at CMP of Rs 1400-1460  and hold it in the portfolio for excellent long term returns.

A slow and steady winner