CARE Ratings

Standalone revenue from operations for FY23 grew 13% to Rs. 248.8 crores, up from Rs. 219.3 crores in the previous year. Net profit increased by 23% to Rs. 103.8 crores, with a stable operating profit margin of around 46%. On a quarterly basis, Q4 FY23 income from operations rose to Rs. 68 crores from Rs. 60 crores in Q4 FY22. Consolidated revenue for FY23 also saw a 13% growth, reaching Rs. 279 crores, with consolidated net profit at Rs. 85.5 crores, an 11% increase.

The Indian economy demonstrated resilience amidst global headwinds^🌐, with an estimated 7% growth in FY23. Key indicators like GST collections and PMI showed healthy performance, though consumption demand remained uneven. Gross Bank Credit grew 15% in FY23, primarily driven by retail (20.6%) and services (19.8%), while industrial credit grew a subdued 5.7%. Corporate bond issuances increased 32% to Rs. 8.5 lakh crores, contrasting with a 32% decline in CP issuances to Rs. 13.7 lakh crores.

The 14% growth in ratings revenue for FY23 was largely attributed to the robust performance of the initial ratings business, particularly the bank loan segment, which saw significant traction due to higher working capital requirements and bank credit being a preferred funding route. Incremental debt rated in FY23 increased by 78% to Rs. 3.8 lakh crores, up from Rs. 2.2 lakh crores in FY22. Management emphasized sustaining this momentum through quality-led growth, knowledge dissemination, and focused outreach.

CARE Advisory Research and Training (CART) operated close to break-even in FY23, achieving a cash flow positive outcome. CARE Risk Solutions, however, incurred major losses due to significant investments in product development, including upgrading existing products and venturing into new business lines like data analytics. Management acknowledged that these businesses require longer timelines to achieve substantial traction and profitability, but expressed confidence in their strategic direction and ongoing product development efforts.

Under CART, CareEdge has developed a tech-enabled ESG platform, 'SIRIUS', completing ESG assessments for over 900 listed Indian companies. The company has also been empaneled as an ESG rating provider for AMCs. Management noted the clear regulatory intent for ESG reporting (BRSR) and anticipates final guidelines soon, which is expected to create significant opportunities for their comprehensive consultancy and rating services in this domain.

CareEdge reported a significant reduction in attrition levels for FY23, reaching around 28%, attributed to consistent efforts in implementing market-related benchmark pay and employee-friendly initiatives. The company is actively engaging with younger talent to understand their needs and is focusing heavily on HR, including multiple training and incentive programs, to ensure it remains a top workplace. Employee costs are expected to remain range-bound as a percentage of operating revenue.

CareEdge's international subsidiaries demonstrated growth. CARE Ratings Africa Private Limited continued its impressive performance, assigning ratings to over 50 corporates in Mauritius. CARE Ratings Nepal Limited also reported growth, executing 100 new rating assignments during FY23. CARE Risk Solutions has also expanded its customer base to include marquee clients in Canada and UAE, indicating a broader global market foray for its analytical offerings.