CREDIT ANALYSIS AND RESEARCH LTD

Industry: Rating Agency Recommendation: Subscribe

December-12

Key Data
Issue Open: Dec 07th, 2012 Issue Close: Dec 11th, 2012 Issue Price: Rs 700/- to Rs 750/Minimum Order Quantity: 20 multiple Issue Type: 100% Book Built Issue CARE assigns IPO grade: N.A

About the Company:

Incorporated in 1993, Credit Analysis & Research Ltd (CARE) is the second largest full-service credit rating company in India. CARE offers rating and grading services across a diverse range of instruments and industries including IPO grading, equity grading, and grading of various types of enterprises, including shipyards, maritime training institutes, construction companies and rating of real estate projects, among others. Since inception till 30.09.2012 it has completed 19069 rating assignments valued at Rs. 4405 crores. The largest stakeholders are IDBI Bank Ltd, Canara Bank and State Bank of India.

Investment Rationale: Issue Structure

Qualified Inst Bidders Non-Institutional Bidders Retails Individual Bidders Min 50% Min 15% Min 35% Promoted by leading financial leaders: Promoters are IDBI Bank, Canara Bank, SBI, IL &FS Financial Services Ltd, Federal Bank Limited, Bajaj Holding & Investment Limited, Aditya Birla PE Trust, IL & FS Trust Co. Ltd. While in comparison Crisil is promoted by Global rating agency Standard and Poors with 51% stake, ICRA is promoted by Moody largest shareholder with 28.51% stake. Established brand in rating debt & other instruments: We believe that the strong brand recognition and credibility in the ratings market is been gained through years of experience in the ratings business. Experienced management: It has over 19 years of experience in rating debt instruments and related obligations covering a wide range of sectors, and as of September 30, 2012, it has top rating relationships with 4,644 clients. Expand into new markets: CARE is planning to expand its footprint outside of India in ratings business, Currently CARE is recognized by the Capital Markets Development Authority, Republic of Maldives to carry out ratings of debt instruments and bank loans and facilities in respect of Maldivian companies. It has also been granted indirect recognition by the Hong Kong Monetary Authority as an external credit assessment institution for the purposes of the regulatory capital framework in Hong Kong. Domain experience across a range of sectors: CARE has rated debt instruments covering a diverse range of sectors, such as manufacturing, services, banks and infrastructure. It is having experience in providing debt and issuer ratings to many types of enterprises, including corporates, banks, financial institutions, public sector undertakings, state government undertakings, subsovereign entities, NBFCs, SMEs and micro-finance institutions.

Listing
Bombay Stock Exchange Ltd National Stock Exchange Ltd

BRLM
Kotak Mahindra Capital Co Limited DSP Merrill Lynch Limited Edelweiss Financial Services Limited ICICI Securities Limited IDBI Capital Market Services Limited SBI Capital Markets Limited

Industry Snapshot
Customers Market Presence Govt Regulations M-View Open India Medium Positive

Promoters/ Management
Mr. O.V.Bundellu Mr. D.R. Dogra Mr, Rajesh Mokashi Dr. Nitish K Sengupta Mr. Venkatraman S Mr. Bharti Prasad Chairman MD & CEO Dy. Director Ind Dir Ind Dir Ind Dir

Mview
We believe CARE IPO provides investor an opportunity to invest in the leading credit rating company in India. Considering the above rationale & valuation parse this issue is available inline with market value or equal to listed peers like ICRA and Crisil trading at 4.8 & 17 times the book value, hence keeping the scope of growth same to all the rating players, we believe CARE has better growth potential and expect to perform well in the industry growth. CARE is currently available at 5.3 and 5.6 times on P/BV valuation and on PE valuations CARE is available at 18.5x in comparison to ICRA & CRISIL which is trading at 27x and 35x. Hence, we advice investors should subscribe this IPO.

AVP Research
Prashanth Tapse

Financial Performance (Rs.Cr)

Net Sales EBITDA EBITDA margin (%) Net Profit PAT Margins (%) EPS

HY2012(C) 104.0 71.8 69.0% 49.8 47.9% 17.4

FY2012 (C) 218.8 163.8 74.9% 115.8 52.9% 40.5

FY2011 (S) 172.3 131.6 76.4% 87.9 51.1% 30.8

FY2010 (S) 152.0 123.7 81.3% 85.7 56.4% 30.0

prashanth.tapse@methagroup.in
022-40070155/156

Associate
Pooja Jain

poojajain@methagroup.in

Disclaimer: The information contained in this report is obtained from reliable sources and is directed at investors. In no circumstances should it be considered as an offer to sell/buy or, a solicitation of any offer to, buy or sell the securities or commodities mentioned in this report. No representation is made that the transactions undertaken based on the information contained in this report will be profitable, or that they will not result in losses. Mehta Groups and/or its representatives will not be liable for the recipients investment decision based on this report. Corporate Office: Mehta Group 612, Arun Chambers, Tardeo Road, Mumbai 400034 Tel: +91 22 40070100, Fax: +91 22 40070102 Email: info@mehtagroup.in Website: www.mehtagroup.in