This Standard and Poor’s (S&P’s) subsidiary rates over two-thirds of the bonds issued in India. CRISIL has now more than 50 per cent of the market to itself. This is made possible by regulatory barriers to entry. A foreign pedigree has also helped. CRISIL’s business generates loads of cash - cash margins have averaged 35 per cent in the last five years.
But CRISIL’s area of operations depends heavily on the outlook of the economy. The more positive the outlook the more business CRISIL gets from foreign corporations and institutions. Also, a number of upstarts have started biting. CARE, Fitch, ICRA and Brickwork have now edged in bringing CRISIL’s market share down from 55 per cent (CY09) to 51 per cent (CY10).
CRISIL has compounded its earnings by 50 per cent over the last five years. CRISIL trades at a PEG of only 0.64. Buy.
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