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Investors Meet
Investors Meet June 2015
Disclaimer
2
Certain statements in this document may be forward-looking statements.
Such forward-looking statements are subject to certain risks and uncertainties
like government actions, economic developments, and many other factors
that could cause the Company’s actual results to differ materially from those
contemplated by the relevant forward-looking statements. Credit Analysis and
Research Ltd. will not be in any way responsible for any action taken based on
such statements and undertakes no obligation to publicly update these
forward-looking statements to reflect subsequent events or circumstances.
Investors Meet June 2015
Contents
Value Proposition
CARE in FY 2015
CARE Over the years
Credit Rating Market – Going Ahead
3
Investors Meet June 2015
Brief Snapshot
4
Second Largest Rating
Company in India(1)
Second Largest Rating
Company in India(1)
Recurring Nature of
Rating Business
Recurring Nature of
Rating Business
High Margins & ProfitabilityHigh Margins & Profitability
International expansion
International expansion
Dominant share in rated
companies from BS1000,
ET500 & FE500
Dominant share in rated
companies from BS1000,
ET500 & FE500
Diversified Business Mix
Diversified Business Mix
External Rating
Committee
External Rating
Committee
(1) In terms of rating income FY15
Investors Meet June 2015
Diversified Business Mix
5
Ratings
� Manufacturing & Services sector
� Financial sector
� Infrastructure
� Small & Medium Enterprises
� Structured Finance
� Sub Sovereign ratings
� Alternate Inv. Fund, Infra. Dev. Fund
Information Analysis & Grading
� Industry & Customized Research reports
� CARE Industry Risk Metrics (CIRM) reports
� Grading services
� Training
� Valuations
International expansion
� Already in Maldives
� Launched international rating agency – ARC
Ratings in London
� Exploring markets in neighboring countries ,
Africa and Mauritius
CARE Kalypto
� Risk Solutions for
o Basel II, Credit risks, Operational risks, Fund
Transfer Pricing, Asset Liability
Management, Value at risk, Capital
Adequacy Ratio, IFRS
� Advisory Services
Investment income
Investors Meet June 2015
Ratings GradingInformation
Analysis
Corporate Financial Sector Public Finance MSME Infrastructure Sector� IPO
� Shipyard
� ESCO
� Educational
institutions
� Maritime training
institutes
� RESCO
� Construction
companies
� Real estate star
� Equigrade
� SME fundamental
� Renewable Energy
Companies/Projects
� Customized research
� CARE industry risk
metrics (150 sectors)
� Research reports by
economic research
team on domestic
economy & global
economic events
� Valuation of Market
Linked Debentures
(“MLDs”),
� Monthly PP-MLD
report
� Debt
� Bank loan
� Issuer
� Corporate governance
� Banks
� NBFCs
� Housing finance
� Insurance
� Mutual funds
� Securitization
programmes
� Alt. Inv. Fund
� Infra. Dev. Fund
� Sub-sovereign entities
� ULBs
� NSIC – SSI rating
� SME rating
� Power
� Roads
� Ports
� IDF
Growing Brand Equity
6
� Strong brand recognition in the ratings market, gained through over 22 years of experience
� Attributes of objectivity and integrity have placed premium on CARE ratings amongst clients and investors
� Received recognition and accreditation from various regulatory bodies and entities
� Sponsors industry events & participates in seminars
� Domain experience across a range of sectors
� Graded the largest number of IPOs since the introduction of IPO grading in India
� Ratings for state enterprises provided for maximum number of states in terms of implicit state ratings
Rating relationship with over 9,828 clients
CARE RatingsCARE Ratings
Investors Meet June 2015
Strong Rating Credibility - External Rating Committee
7
� Former
Managing
Partner, S.B.
Billimoria & Co.
� Member of
Board of
Directors of a
number of
companies and
organizations
including RBI
Y. H. Malegam
(Chairman)
Y. H. Malegam
(Chairman)
� Former
Managing
Director of State
Bank of Mysore
� Former Deputy
Managing
Director and
Chief Credit
Officer of SBI
P.P. PattanayakP.P. Pattanayak
� Former whole
time member of
SEBI
� Former Chairman
and Managing
Director of
Corporation Bank
and SIDBI
V.K. ChopraV.K. Chopra
� Managing Director,
CARE
� Pub. Interest
Director of MCX
� Director of ARC
Ratings Holdings
� Chairman of CARE
Kalypto & ARC
Ratings SA
D.R. DograD.R. Dogra
� To maintain high standards of professional quality/integrity and address any conflict of
interest, CARE has an external ratings committee comprising a majority of independent
members
� Have had an external rating committee since inception (1993)
� Ratings ratified by highly qualified committee
Steadfast commitment to veracity and objectivity in the opinions provided
V. LeeladharV. Leeladhar
� Former Deputy
Governor, RBI
� Ex-CMD Union
Bank
� Former member
of Board of
Directors of IIBF,
NABARD, NHB
etc.
Investors Meet June 2015
Strong Rating Credibility - Ratings Process
8
� Established rating procedures
� Separate quality control department
� Continuous criteria development and
improvement
� 3 levels of checks & balances
Quality
Systems & Risk
Management
Quality
Systems & Risk
Management
Information
Technology
Information
Technology
� Implemented integrated information interface
for work flow management
� Established CARE Knowledge Centre (CKC)
� Established Online Research Distribution
System for subscription of research reports
Principled
ratings
approach
Principled
ratings
approach
� Strong policies in place to drive merit based
ratings
� Compensation terms insulated from rating
assigned
� In-line with SEBI, RBI compliance CARE publishes
an annual Default and Transition study of CARE
rated issuers
� CARE’s issued rating exhibit high level of stability
– cumulative default rates and transition rates in
line with industry average and peers
Industry
analogous
default rates
Industry
analogous
default rates
Robust ProcessesPrincipled approach, strong &
transparent disclosures
Compensation terms insulated from rating assigned
Investors Meet June 2015
Strong Rating Credibility - Ratings Process
9
Aligned with benchmark processes laying strong emphasis on ratings indisputability
Backed by strong team of around 370 analysts
Client approval / PR / Rational
Rating committee
Sector Head & quality control
Preparation of rating Preparation of rating note of submission
to group head
Meeting with Official and due
diligence
Query List
Rating Agreeme
nt
Multi Layer ProcessThree
levels of
checks &
balances
Investors Meet June 2015
� Recognized by the Capital
Markets Development
Authority, Republic of
Maldives
The Company has along with four partners from Malaysia, Brazil, Portugal and South Africa, launched international credit rating
agency named ARC Ratings, SA, in London on January 16, 2014
Global Footprint
10
Expanding international presence - only leading Indian rating Company with global play
� In process of starting operations
in Mauritius already recognized
by market regulator there
Mauritius
Hong Kong
� Recognized by the Hong
Kong Monetary Authority
Brazil
Portugal
Malaysia
South Africa
Maldives
Nigeria
� Had Signed a MoU for
exploring possibilities of
providing risk management
solutions & training in Nigeria
Ecuador
� Offers
technical
assistance
Mexico
� Provided
technical
assistance
� Exploring opportunities
to start operations in
African countries
Investors Meet June 2015
Experienced & Professional Management
11
� Over 36 years of experience in financial
sector & credit administration
� Certified Associate of Indian Institute of
Bankers
� Holds Master’s degree in agriculture and
in business administration
� Over 29 years of experience in finance,
commerce and credit risk sectors
� Before joining CARE, worked for Otis Elevator
Company India, DSP Financial Consultants &
Kotak Mahindra Finance
� Holds Master of Management Studies degree
� Qualified Chartered Financial Analyst
Driving a transformational enterprise - hitting the right milestones at the right juncture
Nurtured into the 2nd largest rating Company in India
Charting the course for a Global footprint
Focused on creating value for shareholders
Pushing innovation agenda - introducing novel services thereby changing industry landscape
Building transparency - working closely with investors, regulators, policy makers and other market participants
Developing and upholding confidence in CARE’s risk opinions
At forefront of analyzing and monitoring credit risk since over 20 years
D R Dogra - Managing Director Rajesh Mokashi - Deputy Managing Director
Investors Meet June 2015
Experienced & Professional Management
12
T.N. Arun Kumar
Chief General Manager, Ratings
� 25 years of experience in
financial services
� PGDM; CFA; FRM
Navin K. Jain
Company Secretary & Compliance
Officer
� 26 years of experience in
accounting services
� Masters degree in financial
services management & C.S.
Milind Gadkari
Chief General Manager, Ratings
� 18 years of experience in
credit rating, training of
new recruits
� Master’s degree in
management sciences; CFA
Mehul Pandya
Chief General Manager,
Business Development
� 18 years of experience
in rating services
� MBA; CFA
Swati Agarwal Jain
Chief General Manager,
Business Development
� 18 years of experience in
credit rating, advisory and
consultancy
� PGDM
Revati Kasture
Chief General Manager
� 15 years of experience in
credit analysis and research
services
� C.A.; Cost Accountant
Madan Sabnavis
General Manager, Chief
Economist
� 27 years of experience in
development banking,
commercial banking,
engineering & commodity
markets
� Masters degree in
economics
Sanjay Kumar Agarwal
General Manager, Business
Development
� 20 years of experience in
corporate and infrastructure
finance, risk management
and banking
� C.A.; ICWA
Amod Khanorkar
General Manager, Ratings
� 21 years of experience in
credit rating, valuations
and project appraisal in
infrastructure sector
� PGDM
Chandresh M Shah
Chief Financial Officer
� 17 years of experience in
finance and accounting,
taxation, US GAAP, Planning
& Analysis, Investor
relations, M&A
� C.A.
Umesh Ikhe
Chief Technology Officer
� 18 years of experience
� Bachelors Degree in
Computer Science;
Executive General
Management Programme
from Indian institute of
Management
Yogesh Dixit
Chief General Manager,
� 25 yrs of experience in
various areas of financial
service industry like Credit
Ratings, project financing,
SME funding, credit
guarantee etc.
� B.E, M Tech, MBA, CAIIB
Investors Meet June 2015
Shareholding Snapshot as on March 31, 2015
100% Public Shareholding- Professionally Managed Names of Shareholder holding above 1% Holding %
Life Insurance Corporation of India 9.94
Canara Bank 9.90
IDBI Bank Ltd 6.21
Franklin Templeton Investment Funds 4.79
State Bank of India 4.69
Bajaj Holdings and Investments Ltd. 3.46
Government Pension Fund Global 3.06
Russell Investments Limited 1.83
CLSA Global Markets Pte Ltd. 1.72
Parvest Equity India 1.68
The Wellington Trust Company National
Association 1.64
Reliance Capital Trustee Company Ltd. 1.54
Tata Steel Limited 1.22
GMO Emerging Domestic Opportunities Fund 1.20
Franklin Templeton Mutual Fund A/C 1.10
Tata Investment Corporation Limited 1.06
Aditya Birla Private Equity Trust 1.03
Macquarie Fund Solutions A/C Macquarie Fund 1.02
Total 57.09
9.94
0.49
20.87
13.4925.05
0.72
6.14
23.3
IFI
PSU /
Govt
PSU
Banks
Mutual
Funds
FII
Other
Banks
FPI
Others
13
Investors Meet June 2015
Value Drivers
• Best-in-class operating model and expansive distribution network
• Seasoned management with sound execution experience
• Parentage of marquee banks
• Strong origination capabilities and relationship management
Second Largest
Ratings Company in
India
Driving Cost
Efficiency and
Productivity
• Strong discipline and governance around capital allocation and expenditure
• Cost efficient business model driven by CARE Knowledge Centre and Ci3 reduced
overall employment costs.
• Higher employee productivity
Strong financial
Profile
• FY09-FY15 Rating Revenue CAGR of 17.7%
• FY09-FY15 Basic EPS CAGR of 16.3%
• Strong cash position of ~Rs 3.33 bn supports multiple growth opportunities as on 31st
March 2015.
14
Investors Meet June 2015
Value Drivers
Driving towards value
creation for Shareholders
• Dividend friendly track record. Paying dividends since first full year of
operations
• Dividend Payment during FY 2015 of 790% including special dividend of Rs.
65 per share, Rs. 6 interim dividend and Rs. 8 final dividend
Investing in Strategic
opportunities- To Enable
Robust Long Term
Opportunities for Growth
• Best positioned to capture sector opportunities
• In process of implementing global strategic plan
• Increase information analysis capabilities
• Leverage brand to nurture risk solutions and advisory business
• Look at organic and inorganic value across accretive transactions
15
Investors Meet June 2015
Dominant share in BS-1000
CARE Rating,
46%
CRA-2, 31%
CRA-3, 29%
CRA-4, 13%
CRA-5, 6%
Market Share %
16
Investors Meet June 2015
Dominant share in ET-500
CARE Rating,
54%
CRA-2, 40%
CRA-3, 35%
CRA-4, 21%
CRA-5, 10%
Market Share %
17
Investors Meet June 2015
Dominant share in FE-500
CARE Rating,
52%
CRA-2, 40%
CRA-3, 36%
CRA-4, 21%
CRA-5, 9%
Market Share %
18
Investors Meet June 2015
Financial Performance in FY 2015
Rs crore FY14 FY15 Growth (%)
Rating Revenue 226.91 254.92 12.34
Other Revenue 2.55 2.29 -10.47
Total Revenue 229.46 257.21 12.09
Other Income 35.66 43.56 22.16
Total Income 265.12 300.77 13.45
Total Expenses 84.29 91.86 8.99
Op. Profit 145.18 165.34 13.89
PAT 129.70 147.19 13.49
19
Note: Expenses stated in the table above excludes certain costs for ESOP, additional depreciation, finance
charge and contribution to CSR – Rs. 9.53 crores for FY15 and Rs. 1.43 crores for FY14 (pre tax)
Investors Meet June 2015
Financial position (1)
20
103
154177
206227
265 301
0
80
160
240
320
FY09 FY10 FY11 FY12 FY13 FY14 FY15
Rs
cr
Total Income
76
108
128121
131 145
165
0
35
70
105
140
175
FY09 FY10 FY11 FY12 FY13 FY14 * FY15 *
Rs
cr
Operating Profit
7 6 830
5874
192
0
50
100
150
200
250
FY09 FY10 FY11 FY12 FY13 FY14 FY15
%
Dividend Payout Ratio
55
87 87 91108
130 147
0
50
100
150
FY09 FY10 FY11 FY12 FY13 FY14 * FY15 *
Rs
cr
PAT
* Op. Profit & PAT for FY14 and FY15 is excluding charge for ESOP, additional depreciation due to change in useful
lives of assets, finance charge & contribution to CSR
Investors Meet June 2015
Financial Position (2)
* PAT margin for FY14 and FY15 is excluding certain costs for ESOP, additional depreciation, finance
charge and contribution to CSR – Rs. 6.86 crores for FY15 and Rs. 1.03 crores for FY14 (post tax)
21
53.7 56.7
51.4 52.1 49.8 48.9 48.9
0
10
20
30
40
50
60
FY09 FY10 FY11 FY12 FY13 FY14 * FY15 *
PAT Margin %
Investors Meet June 2015
Growth in Business (1)
22
711 7581114
3,900
5,263
7,754
9,828
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
FY09 FY10 FY11 FY12 FY13 FY14 FY15
Rs
cr
No. of Active Clients
15791808
2187
5,980
7,439
7,865 7,973
0
1000
2000
3000
4000
5000
6000
7000
8000
FY09 FY10 FY11 FY12 FY13 FY14 FY15
Rs
cr
No. of Assignments
Investors Meet June 2015
Growth in Business (2)
23
1148 1250
1654
4,883
6,074 6,117
5,054
0
1300
2600
3900
5200
6500
FY09 FY10 FY11 FY12 FY13 FY14 FY15
Rs
cr
No. of Bank Facilities Rated
189
277
238
307 298
289
317
0
50
100
150
200
250
300
350
FY09 FY10 FY11 FY12 FY13 FY14 FY15
Rs
cr
No. of Debentures Rated
Investors Meet June 2015
Future Growth Drivers: Debt Market
� Market under-penetrated
� To benefit from increased penetration by pension funds and
insurance companies
� Performance will depend on
• Government starts off its spending programme in Q1 of FY16
• Some of the stalled mining and power projects start moving
ahead with the auction of coal taking place successfully
• Lowering of rates further by the RBI by 50 bps in course of the
year
• Industries in the capital goods segment going in for higher
borrowing to finance investment as well as infra companies
24
Investors Meet June 2015
Future Growth Drivers: Bank loan ratings
� Credit has witnessed a pickup which will provide some positive
support for bank loan ratings
• Slowdown however, in credit growth to industry
• Services and retail performing relatively better
� Some traction in bank credit as the telecom companies will be
paying up for the auctions
� Ratings coverage of Bank Loans expected to continue growing
� New bank licenses
• BLR business to be positively affected with a lag
25
Investors Meet June 2015
Risk factors
� Economic growth does not pick up
• Industrial investment does not pick up
• Infrastructure progress remains sluggish
� Bank credit growth does not improve
• Interest rates remain elevated
• Corporates continue to access ECB market
� Regulatory changes affecting business
� A bad monsoon upsetting the growth prospects
� Higher crude price upsetting all fiscal and monetary calculations
� Interest rates not being lowered but increased in case inflation rises
26
Investors Meet June 2015
Thank You
27
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