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Summary: CARE Ratings and ICRA dominate the same ratings business but are taking very different approaches to the cash it generates. CARE is harvesting strong margins from its core ratings franchise, while ICRA is investing heavily in research, analytics and technology to build a second growth engine.
CARE Ratings and ICRA do the same job: telling lenders and bond buyers whether a borrower is likely to repay. Both rate bank loans, bonds and structured finance. Both run on people and data rather than factories, so growth costs little in fresh capital. And both had a strong FY26.
But the two companies are no longer the same bet.
Nearly 89 per cent of CARE's FY26 revenue came from ratings alone. At ICRA, ratings brought in Rs 336 crore against Rs 266 crore from research, analytics and financial technology, a 56:44 split. That gap has grown wide enough to change how the two should be judged.
Five years, two different paths
ICRA has grown faster, while CARE has maintained comparable returns with a far greater dependence on its ratings franchise
| Company | 5Y revenue CAGR (%) | 5Y profit after tax CAGR (%) | 5Y avg ROE (%) | 5Y avg operating margin (%) | FY26 ratings share of revenue (%) |
|---|---|---|---|---|---|
| CARE Ratings | 13.7 | 13.8 | 15.5 | 33.6 | 89.3 |
| ICRA | 14.8 | 17.2 | 15.6 | 32.2 | 55.9 |
CARE: Old business working harder
CARE's rating revenue rose to about Rs 423 crore in FY26, up nearly 18 per cent. Standalone revenue grew 15 per cent, while standalone operating margin reached 48 per cent, unusually high even for a ratings business.
The reason is simple: CARE already employs its analysts, runs its rating committees and pays for its databases before the next assignment lands. When revenue rises 15 per cent, none of those costs needs to rise by the same amount. In FY26, CARE's employee costs grew only 11 per cent and consumed 42 per cent of standalone revenue, against roughly 49 per cent at ICRA. Every extra rupee of revenue is falling straight to CARE's bottom line.
That does not prove CARE has a permanent cost advantage. The two companies allocate costs differently, and neither discloses enough on pricing or analyst workload to say for certain. But CARE is getting more profit from its cost base today, while staying almost entirely dependent on one business.
ICRA: Spending margin to buy size
ICRA's ratings business is not struggling either. It grew a healthy double digits in FY26. But research and analytics, which covers risk models, bond valuation, banking technology and the newly bought Fintellix, is now worth Rs 266 crore, nearly four-fifths the size of ratings. ICRA paid close to Rs 250 crore for Fintellix alone.
The logic is different from ratings. A bank hires a rating agency once a year. It can use software and risk models every day. That is a bigger prize than ratings alone, and it explains why ICRA is willing to spend its balance sheet chasing it.
It comes at a cost, though. ICRA's research and analytics segment earned a 24 per cent segment margin in FY26, nowhere near CARE's economics. Ratings scale almost for free once an issuer is rated. Software and consulting do not. Winning the next contract often means hiring the next analyst, and a product has to be built and sold before it earns anything back. ICRA is paying today for a market that may pay off tomorrow.
CARE is not ignoring this. CareEdge Analytics already sells similar risk products, but the whole non-rating business brought in only about Rs 50 crore in FY26 and sat near breakeven. ICRA's head start is real: two decades in the business, plus its ties to Moody's global research and rating methodology. CARE is building the same capability from a much smaller base, and organically rather than through acquisitions.
A door only CARE can walk through
ICRA, CRISIL and India Ratings all sit under global parents, Moody's, S&P and Fitch, that already own international ratings franchises, so none of the three has much reason to build a competing global brand. CARE has no such parent. Through CareEdge Global, based in GIFT City, India's international financial services hub, it is trying to build an independent international ratings business, and has already rated sovereigns and several billion dollars of corporate debt. It is still an early, small experiment against firms with decades of head start, and it could just as easily burn cash as build a franchise. But ICRA cannot pursue it as freely.
Why the market caught up
At the end of 2022, ICRA was worth roughly Rs 4,400 crore while CARE valued only around Rs 1,800 crore. Since then, the gap has closed. That is not because ICRA's business weakened. Its ratings franchise kept growing, and there is no evidence it lost meaningful market share. The convergence happened because CARE recovered: its rating growth returned, its margins rose, its market-share losses from the IL&FS-era credibility crisis stopped, and its new businesses moved toward breakeven. The market re-rated a recovering CARE. It did not punish a declining ICRA.
The verdict, for now
Ratings is a business that throws off far more cash than it needs to reinvest in itself. CARE and ICRA are doing different things with that cash. CARE is banking it, letting a 48 per cent margin business compound while its new ventures stay small and self-funded. ICRA is spending it, buying its way into a second business that is already 44 per cent of revenue but earns barely half of the ratings business's margin.
Two numbers will settle the argument as results come in. It is best to wait and watch whether ICRA's research and analytics margin climbs from 24 per cent toward the ratings business's own economics as Fintellix beds in. And check whether CARE's non-rating revenue breaks meaningfully past the Rs 50 crore mark it has been stuck near for years. Until one of those moves, CARE is running the better business. ICRA is building the bigger one.
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