Concall AI

CARE Ratings Limited — Q4 FY26 earnings call

Call held 14 May 2026

Management summary

CARE Ratings delivered a strong Q4 FY26, with consolidated revenue up 18% and PAT up 24% to an all-time high of ₹173.69 crores. The non-ratings segment, particularly CAAPL, achieved breakeven, contributing to broad-based growth and margin expansion. The company maintained its quality-led growth strategy, expanded its international footprint, and continued to invest in AI and technology, while navigating a softer bond market and macroeconomic headwinds for FY27.

Highlights

Consolidated revenue from operations for FY26 stood at ₹473.07 crores, marking full year growth of 18%.
Consolidated operating profit amounted to ₹197.39 crores, reflecting a growth of 27% with operating margin at 42%.
Consolidated profit after tax reached an all-time high of ₹173.69 crores, reflecting a year-on-year growth of 24% over FY25 with PAT margin of 33%.
CAAPL achieved breakeven during FY26, completing a meaningful turnaround from the losses of the prior year.
The Board of Directors has recommended a final dividend of INR14 per share, taking the total dividend declared for the year to INR22 per share.

Concerns

Corporate bond issuances declined by 3.2% for the full year FY26 and by 11.3% in Q4 FY26.
FY27 real GDP growth projected to moderate to around 6.7% from a pre-conflict baseline of 7.2% due to global crude oil prices and potential weaker monsoon.
CareEdge Global IFSC, while performing well in its first full year, is still in a nascent stage and expected to incur a loss.

Key financials

01 Consolidated Revenue from Operations ₹473.07 Cr +18%YoY
02 Consolidated Operating Profit ₹197.39 Cr +27%YoY
03 Consolidated Operating Margin 42%
04 Consolidated PAT ₹173.69 Cr +24%YoY
05 Consolidated PAT Margin 33%
06 Standalone Domestic Ratings Income ₹387.72 Cr +15%YoY

What they filed

Q1 FY27: revenue up 19.1%, net profit up 26.9% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	117	96	110	94	136 +16%	112 +17%	131 +19%	112 +19%
Expenses	62	66	62	66	68	72	70	77
EBITDA	56	30	47	28	68 +21%	40 +33%	61 +30%	35 +25%
Margin	47%	32%	43%	30%	50%	36%	46%	31%
Other income	12	12	15	14	13	13	16	15
Interest	0	1	1	1	1	1	1	1
Depreciation	3	3	3	3	3	4	4	4
Profit before tax	64	39	59	37	77 +20%	49 +26%	72 +22%	45 +22%
Tax rate	27%	27%	26%	29%	26%	25%	26%	27%
Net profit	47	28	43	26	57 +21%	37 +32%	53 +23%	33 +27%
EPS	15.41	9.29	14.24	8.61	18.89	11.96	17.58	10.73

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue

₹473.05 Cr Total

Ratings Segment ₹423.05 Cr 89.4%
Non-Rating Segment ₹50 Cr 10.6%

Capital allocation

high confidence

Dividend ₹14/share (final)

I'm happy to share that the Board of Directors has recommended a final dividend of INR14 per share at a face value of INR10, which will take the total dividend declared for the year to INR22 per share.
Liquidity Liquidity disclosed Cash on the balance sheet provides confidence for striking meaningful deals at the right valuation.

So, we are having the cash on the balance sheet, which is giving us the confidence in terms of striking at the right format in terms of any meaningful deal coming at the right valuation.

Guidance & targets

Market Share

Incremental Business Market Share Market Share · Current Year · High confidence 24%-25%

In terms of the market share by count or by debt, we continue to hold about a 24%-25% market share in the incremental business, which is there, both by count as well as the volume of debt rated.

— Revati Kasture, Executive Director and Head Business Development

Non-Ratings Revenue Contribution

Non-Ratings Segment Revenue as % of Total Revenue Non-Ratings Revenue Contribution · Low confidence 20%

From 10% today

Somewhere down the line we had our vision to get this revenue contribution to 20% of the total revenue, which means that this segment has to accelerate the revenue growth significantly higher than the ratings revenue growth.

— Priyank Chheda, Analyst

Ratings Business Growth

Ratings Business Growth vs Industry Ratings Business Growth · Medium confidence Faster than industry

So, I think we have been quite clear in our strategy on this. And largely speaking, we have been growing at a pace which is faster than the overall ratings industry growth.

— Mehul Pandya, MD and Group CEO

Market context

India Real GDP Growth GDP Growth · FY27 · High confidence 6.7%

Previously 7.2% → 6.7%

Looking ahead to FY27, we project India's real GDP growth to moderate to around 6.7%, assuming global crude oil prices average at around US$90 per barrel for the full year. This represents a downward revision from our pre-conflict baseline of 7.2%.

— Mehul Pandya, MD and Group CEO

What to watch in Q1 FY27

CareEdge Global IFSC profitability

Next quarter / ensuing years

Current Loss expected in FY26 (first full year)

Target Progress towards profitability

Why it matters

CareEdge Global is a new international business line, and its path to profitability will indicate the success of international expansion.

Being in the nascent stage of operations, it will require some time to get into the profitable operations zone. But we are fully committed to expanding these operations beyond the market that we currently operate, and we are very confident that we will be able to achieve that in the ensuing years.

Risks & concerns

Geopolitical conflict and global energy supply chain disruptions
medium

Ongoing conflict in West Asia and uncertainty around its resolution introduces meaningful headwinds, expected to keep oil prices elevated, impacting India's high energy import dependence.

Management acknowledged
Moderation in India's GDP growth for FY27
medium

Projected real GDP growth for FY27 is 6.7%, a downward revision from 7.2% pre-conflict baseline, assuming global crude oil prices average $90/barrel.

Management acknowledged
Potential weaker monsoon and widening current account pressures
medium

Dual challenge of a potentially weaker monsoon amid a rising El Nino probability and widening current account pressures from higher energy imports warrants careful monitoring.

Management acknowledged
Nascent stage and initial losses in CareEdge Global IFSC
low

CareEdge Global IFSC is in a very nascent stage, and while it has performed well in its first full year of operations, a loss is expected as it is a new line in a competitive environment.

Management acknowledged
ESG ratings market still nascent and market-driven
low

The domestic ESG ratings market is nascent and market-driven, not regulation-driven, requiring regulatory or market catalytic interventions for significant revenue scale despite leadership position.

Management acknowledged

Q&A highlights

2 direct

Dividend payout and capital allocation for inorganic growth Direct

Before pursuing inorganic growth, we needed to stabilize and turn around the subsidiaries which we were already owning, taking up something at a valuation and if it would have been a loss-making and another turnaround story to be required, it would have taken a significant management bandwidth.

Analyst questioned flat dividend payout despite cash accumulation and lack of acquisitions, prompting management to explain the strategic rationale and disciplined approach to M&A.

Asked by Priyank Chheda

Growth drivers for rating revenue, specifically initial vs surveillance Partial

So, your observation is right, Balaji. Typically, the yields in the bond market as far as rating fees are concerned are better than in the bank loan market, and they continue to be in that same trajectory. But having said that, there is a significant portion of rating revenue because as you know, this is an annuity business.

Analyst sought quantitative breakdown of initial vs surveillance revenue, which management could not provide due to fixed fee structures, but confirmed bank loan growth was a key driver.

Asked by Balaji Subramanian

Outlook on rating activity given macroeconomic headwinds and geopolitical situation Partial

At this junction, nobody actually has any prognosis on how long the conflict could be continuing, which are finally the significantly impacted sectors? on the preliminary analysis, there would be a certain impact. But how it would play out in the overall corporate domain and how it could be impacting the overall borrowing programs of the corporates that remains to be seen.

Analyst probed for on-ground weakness or pause in corporate capex, to which management responded that the situation is evolving and hard to predict, but India's corporate credit quality is resilient.

Asked by Balaji Subramanian

Non-ratings segment revenue growth and path to 20% contribution Direct

CareEdge Analytics was a loss-making vertical for us for several years. And as we invested in building the product platform during this year, we have started getting traction on the same. As my colleague, Abhisheik alluded to, the EdgeAvira.Al pitch, which covers CredEdge, IntelEdge, and Kalypto, products, the platform has now achieved market adoption, and the overall CareEdge Analytics business has reached closer to the breakeven in FY '26.

Analyst questioned the slow growth of the non-ratings segment towards its 20% revenue contribution target, leading to a detailed explanation of the turnaround of CareEdge Analytics and the distinct growth profiles of its sub-segments.

Asked by Priyank Chheda

Pricing strategy and competitive landscape in the ratings industry Partial

I wish we would be aware about the competitors' pricing all across because this is a space where you just have to be at it in terms of constant improvements as far as your pricings are concerned, but it's very difficult, I mean, generally to ascertain from the clients also what would be the pricing level of the competition.

Analyst asked about CARE's pricing relative to competitors and if the gap is improving, to which management stated difficulty in knowing competitor pricing but emphasized continuous improvement and growing franchise.

Asked by Rahul Bhandari

Future growth drivers among new verticals (PaRRVA, IPO grading, analytics, geographies) Partial

It will not be possible in terms of highlighting, singling out any particular verticals. But what I can say, again, it has to be looked from ratings and the non-rating business perspective. Ratings business generally across the globe, they would always be regulated businesses.

Analyst sought specific high-growth verticals for the next 3-5 years, but management preferred to discuss growth drivers from a broader ratings vs. non-ratings perspective, highlighting the regulated nature of ratings and the contingent nature of non-ratings growth.

Asked by Devam

2 min read 6 chapters

Detailed narrative

Strong Financial Performance in FY26 Driven by Broad-Based Growth

CARE Ratings reported a strong FY26, with consolidated revenue from operations growing 18% to ₹473.07 crores. Operating profit increased by 27% to ₹197.39 crores, achieving an operating margin of 42%. Consolidated PAT reached an all-time high of ₹173.69 crores, up 24% YoY, with a PAT margin of 33%. This performance was attributed to broad-based growth across domestic and overseas ratings businesses, complemented by significant contributions from non-ratings verticals.

Turnaround of CareEdge Analytics & Advisory (CAAPL)

A significant highlight for FY26 was CAAPL achieving breakeven, marking a turnaround from prior losses of ₹24-25 crores four years ago. The EdgeAvira.AI platform, central to CareEdge Analytics, has gained market traction with its AI-powered credit infrastructure (CredEdge, IntelEdge, Kalypto) now live with clients. CareEdge Advisory also consistently delivered profits, with healthy growth in sustainability services, industry research, and corporate advisory, positioning these non-ratings businesses for increased acceleration in the coming years.

International Expansion and Market Leadership

CareEdge's international operations demonstrated strong progress. CareEdge Global IFSC completed ratings on 45 sovereigns, positioning it among the top 10 global rating agencies by country coverage, and rated over US$8 billion of corporate debt. CareEdge Africa expanded its reach with new licenses in South Africa, Tanzania, and Kenya, while CareEdge Nepal maintained its market leadership. These international ventures are seen as new growth vectors, with CareEdge Global IFSC expected to move towards profitability in the ensuing years.

Commitment to Quality-Led Growth and Analytical Rigor

The company emphasized its quality-led growth strategy, evidenced by consistently high stability rates for investment-grade ratings (at or above industry averages) and default rates within RBI prescribed benchmarks. This robust performance validates the strategy, which is further supported by thought leadership initiatives like 30 webinars and over 400 reports published in FY26. Investments in AI tools and process enhancements are aimed at strengthening analytical quality and operating efficiency, with 60% of employees actively using enterprise AI tools.

Macroeconomic Outlook and Impact on Rating Activity

The Indian economy delivered a strong 7.6% GDP growth in FY26, but FY27 is projected to moderate to 6.7% due to global crude oil prices averaging US$90/barrel and potential weaker monsoon. Corporate bond issuances declined 3.2% in FY26, though bank credit off-take accelerated 16.1%. Management noted that while geopolitical conflicts introduce headwinds, India's corporate credit quality and healthy bank asset quality provide resilience, though the impact on corporate borrowing programs remains an evolving situation.

Disciplined Capital Allocation and Shareholder Returns

The Board recommended a final dividend of ₹14 per share, bringing the total FY26 dividend to ₹22 per share. Management reiterated its disciplined approach to inorganic growth, focusing on strategic fit, adjacent product areas, and intrinsic valuation, especially given elevated valuations in fintech/analytics. The company prioritized stabilizing and turning around existing subsidiaries before external expansion, and with current portfolio performance, it is now better positioned for future acquisitions, with a live pipeline of conversations.

This is an AI-generated summary of a publicly available earnings call transcript.

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