CARE Ratings spurts after Q2 PAT jumps 29% YoY

CARE Ratings surged 8.38% to Rs 556.05 after the company's standalone net profit increased by 29% to Rs 38.47 crore in Q2FY23 from Rs 29.76 crore in Q2FY22.

The ratings agency's standalone income from operations was up by 12% to Rs 77.49 crore in Q2FY23, compared with Rs 69.30 crore in the corresponding quarter of the previous year.

Bank loan ratings segment led this growth, with sustained momentum in initial ratings business. Total income was up by 14% to Rs 86.12 crore in Q2FY23, compared with Rs 75.83 crore in Q2FY22. Total expenses have decreased by 3% during this period compared to Q2FY22. Operating profit increased by 27% to Rs 44.68 crore in Q2FY23 from Rs 35.19 crore in Q2FY22.

Operating profit margin and net profit margin were 58% and 45% respectively in Q2FY23, which reflected good growth compared to corresponding quarter of the previous year.

Net cash generated from operating activities stood at Rs 22.39 crore in the half year ended 30 September 2022, compared with Rs -5.43 crore in the half year ended 30 September 2021.

The company's consolidated total income was up by 13% to Rs93.23 crore in Q2FY23, compared with Rs 82.29 crore in Q2FY22. Operating profit increased by 25% to Rs 42.00 crore in Q2FY23 from Rs 33.53 crore in Q2FY22. Net profit increased by 29% to Rs 34.86 crore in Q2FY23 from Rs 27.07 crore in Q2FY22. The consolidated financials include those of CARE Ratings and its four subsidiaries.

"India's economy is recording relatively healthy growth even in midst of the global headwinds. However, we need to be cautious given the strong interlinkages of Indian economy with the global economies. While the global demand is slowing down, the most crucial aspect would be for the domestic demand to continue recovering. With the deleveraging in the last few years and rising capacity utilisation level, we can expect the private capex cycle to pick up in the next few months," said Mehul Pandya, MD & CEO, CARE Ratings.

The company said that issuances of commercial paper (CPs) and corporate bonds remained muted in Q2 FY23 compared to last year. However, there has been improvement in Corporate Bond issuances in Q2 FY23 when compared to Q1 FY23 (increase by 107% QoQ).

Growth in bank credit has been driven by the services (20% growth), followed by retail segment (19.6% growth). Credit to industrial sector has grown by 12.6%. However, credit growth for large enterprises relatively lower at 7.9% (YoY), the company added.

CARE Ratings has established itself as one of the leading credit rating agencies in India. It provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations.

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