The stock of rating agency Crisil was down 5 per cent on Monday on the back of subdued March quarter results declared last Friday. The company’s revenues were down 0.5 per cent for the first quarter of 2015 (Dec ending) over the last year, led by fall in ratings revenue and muted growth in research revenue. CRISIL’s net profit as a result declined by 18 per cent YoY.

Crisil’s business spans three segments — ratings, research and advisory services. Within ratings, the company services the entire range of debt instruments.

In India, the fortunes of rating agencies depend on the state of the economy and the capital market conditions. Rating revenues broadly comprise bank loan ratings, corporate bond ratings and SME ratings.

During the March quarter, CRISIL’s ratings revenues (34 per cent of revenues) were down 9 per cent, impacted by reduced budgetary support from the Government for the National Small Industries Corporation (NSIC). Credit rating scheme by the NSIC subsidises the rating fees for SMEs by up to 75 per cent. Also fresh issuances from new issuers were subdued which impacted volumes. During the quarter, bank loan ratings volume reported good growth with over 900 new ratings.

Within the research segment, the company caters to both the domestic as well as global finance markets. This segment grew a modest 6 per cent during the March quarter, impacted by the appreciation of the rupee against the GBP and the Euro. The research segment contributes 62 per cent to CRISIL’s revenues.

Revenue decline in the company’s high margin ratings business and subdued growth in research revenues, led to a sharp fall in its operating margins. The margins fell to 28 per cent down from 33 per cent during the same period last year.

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