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Centrum Broking
Crisil (Sell)
Target: ₹2,554
CMP: ₹3,059.85
Crisil’s Q2-CY21 earnings came in as expected. Revenue was bit lower while employee cost was a tad higher that led to a miss on core EBIT by 7.5 per cent. This was offset by better other income and lower tax which led to PAT in-line. Ratings saw a weak quarter led by a soft Q1 for the domestic economy while research saw good traction led by global, buy-side and domestic growth.
The MD & CEO, Ashu Suyash, has resigned and September 30 would be her last day. Amish Mehta, COO would succeed for a period of 5 years. He has over two decades of diverse experience across sectors. Mr. Mehta is a CA and a commerce graduate.
Although, North America contributes 41.3 per cent to revenues and the US economy is slated for a good about 6.5 per cent GDP growth in CY21, the recent run-up in Crisil led by better domestic and global economic prospects, translates to lofty valuations of 53.2x (5-year average at 37x).
Crisil may be a beneficiary of a probable global economic rebound, but this may be priced in, given the recent run-up, turning valuations steep.
Revise rating to Sell but raise PE multiple to 43.3x CY22 EPS. Change target price to ₹2,554.
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