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    CARE Ratings

    CARERATINGGood
    Financial Services·14 May 2025
    Management Summary

    CARE Ratings delivered a robust performance in Q4 and FY25, driven by strong growth in both domestic and overseas ratings businesses, coupled with increased contributions and improved profitability from non-ratings verticals. Strategic initiatives like verticalized business development, technology adoption, and expansion into new areas such as IFSC and ESG ratings have yielded positive outcomes. The company remains focused on outperforming industry growth and leveraging operating efficiencies.

    Highlights

    8

    • Consolidated revenue from operations for FY25 reached INR402.3 crores, marking a growth of 21% Y-o-Y.

    • Consolidated operating profit stood at INR155.3 crores, reflecting a growth of 39% Y-o-Y with an operating margin of 39%.

    • Consolidated PAT for FY25 was INR140 crores, registering a growth of 37% over FY24.

    • Domestic Ratings business (standalone) reported highest ever income from operations at INR336.7 crores, up 19% Y-o-Y.

    • Non-Ratings businesses contributed INR42.2 crores to revenue in FY25, with CareEdge Analytics significantly reducing losses to single digits and CareEdge Advisory achieving double-digit margins.

    • The Ratings to non-Ratings business mix stood at 89.5% to 10.5% in FY25, with a long-term target to transition to an 80-20 mix.

    • CareEdge Global IFSC rated US$3 billion in debt and 39 sovereigns within two quarters of operation, becoming the first Indian agency in global scale ratings.

    • A final dividend of INR11 per share was recommended, bringing the total FY25 dividend to INR18 per share.

    What Changed3

    vs Q4 FY26

    Guidance items4 → 6 (+2)Risks discussed5 → 4 (-1)Q&A highlights6 → 3 (-3)

    Key financials

    Single quarter

    06 metrics
    1. 01Consolidated Revenue₹402.3 Cr+21%YoY
    2. 02Consolidated Operating Profit₹155.3 Cr+39%YoY
    3. 03Consolidated Operating Margin39%
    4. 04Consolidated PAT₹140 Cr+37%YoY
    5. 05Standalone Income from Operations₹336.7 Cr+19%YoY

    Segment breakdown

    Domestic Ratings Business (Standalone)
    ₹336.7 Cr Income from Operations₹155.2 Cr Operating Profit46% Operating Margin₹147.9 Cr PAT
    Non-Ratings Businesses (Advisory, Analytics, ESG)
    ₹42.2 Cr Revenue Contribution
    Ratings Subsidiaries (Consolidated - Standalone)
    ₹23.4 Cr Revenue Contribution
    List

    Guidance & targets

    5
    CategoryTargetPriority
    Business Mix
    Ratings to non-Ratings business mix
    80-20
    		High
    Business Mix
    Ratings to non-Ratings business mix
    nearer to 80-20
    		Medium
    Growth
    Company growth
    better than the industry
    		Medium
    Profitability
    Operating margins
    remain range bound
    		Medium
    Cost Management
    Employee cost to operating revenue
    remain range bound
    		Medium

    Risks & concerns

    6
    RiskSeverity

    Volatile global trade policies and geopolitical concerns

    Identified as key headwinds for the Indian economy in FY26, potentially leading to subdued private sector investment. — Management acknowledged

    medium

    Subdued private sector investment

    Expected to remain subdued in coming quarters due to global trade policy uncertainties and geopolitical concerns. — Management acknowledged

    medium

    Initial losses in ESG rating business

    Management states they are absorbing losses in the evolving ESG space, viewing it as a patient investment with long-term potential. — Management acknowledged

    low

    Limited depth of bond market for lower-rated categories

    The bond market is mostly for AA and AAA categories; a significant jump requires deepening for other rating categories, which is a gradual process. — Management acknowledged

    low

    Areas of Evasion(2)

    • Specific volume of debt rated in FY25
    • Direct comparison of CARE's growth drivers vs. competitors

    Q&A highlights

    3

    “our market share, if you look at the bond market, that has increased on a year-on-year basis. This is largely because the bond market and the securitization market are largely an investor-driven market. Sachin just mentioned the quality of ratings, which have come out from CARE consistently over the past years. And that has also improved our presence and our acceptance.”

    Reveals that market share gains in bond and securitization markets, driven by rating quality and focused segment targeting, are key drivers of growth beyond overall market borrowing volumes, along with continuous pricing efforts.

    asked by Rajiv Mehta

    2 min read5 chapters

    Detailed Narrative

    01

    Strong Financial Performance in FY25

    CARE Ratings reported a robust financial performance for FY25. Consolidated revenue from operations grew by 21% Y-o-Y to INR402.3 crores, while consolidated PAT increased by 37% Y-o-Y to INR140 crores. The operating profit also saw a significant jump of 39% Y-o-Y, reaching INR155.3 crores with an operating margin of 39%. The domestic Ratings business (standalone) achieved its highest ever income from operations at INR336.7 crores, a 19% Y-o-Y increase, with a PAT of INR147.9 crores, up 24% Y-o-Y.

    02

    Strategic Diversification and New Verticals

    The company's diversification strategy is yielding results, with non-Ratings businesses contributing INR42.2 crores to revenue in FY25. CareEdge Analytics significantly reduced its losses to single digits, and CareEdge Advisory reported healthy top-line growth with double-digit margins. The Ratings to non-Ratings business mix currently stands at 89.5% to 10.5%, with a long-term target to achieve an 80-20 mix within three years. New ventures like CareEdge Global IFSC have successfully rated US$3 billion in debt and 39 sovereigns within two quarters, and CareEdge ESG received regulatory approval as a Category 1 provider, completing 6 ESG ratings.

    03

    Operational Efficiency and Technology Adoption

    Management emphasized a focus on 'Quality-led growth' and enhancing operational efficiency through automation and AI-driven tools. This has enabled the company to execute more cases with a similar team size, contributing to improved margins. The integration of AI into credit processing, monitoring, and risk regulatory reporting through the EdgeAvira.AI platform is a key part of their tech-led enterprise evolution, aiming to derive maximum efficiencies and operating leverage benefits.

    04

    Macroeconomic Outlook and Industry Trends

    The Indian economy is estimated to have grown by 6.5% in FY25, moderating from 9.2% in FY24, with a projected moderation to 6.2% in FY26 due to global trade policies and geopolitical concerns. Corporate bond issuances rose by 6% to INR11 lakh crores, and CP issuances increased by 14.5% to INR15.7 lakh crores in FY25. Management noted a structural shift towards bond markets for long-term financing, though the market still needs to deepen for lower-rated categories.

    05

    Capital Allocation and Shareholder Returns

    The Board recommended a final dividend of INR11 per share, bringing the total dividend for FY25 to INR18 per share. Management highlighted a strong cash balance and significant investments in growing non-Ratings businesses and rating subsidiaries (ESG, GIFT City) over the past three years. They anticipate that further fund infusion into these divisions may not be required as they are expected to scale up independently, while remaining open to inorganic opportunities that align with strategic segments and offer synergies.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.