Concall AI

Crisil Limited — Q4 FY25 earnings call

Call held 6 May 2025

Management summary

CRISIL reported a strong Q1 FY25 with overall revenue up 10.2% and PBT/PAT growing by 16% YoY, primarily driven by exceptional performance in the Rating Services segment (up 32.5%). While global macroeconomic uncertainties continue to impact discretionary spending, particularly in the Research, Analytics and Solutions segment, Crisil is strategically focusing on high-growth areas like Gen AI and private capital. The company declared an interim dividend of INR 8 per share, reflecting confidence in its performance.

Highlights

Crisil demonstrated resilience amidst macroeconomic uncertainty in 2024 and Q1 2025, driving meaningful impact for clients.
Overall revenue grew by 10.2% in Q1 FY25 over the corresponding quarter of the previous year.
Profit Before Tax (PBT) and Profit After Tax (PAT) both grew by approximately 16% on a year-on-year basis quarterly in Q1 FY25.
The Rating Services segment grew significantly by about 32.5% YoY in Q1 2025, driven by strong growth from new engagements and robust surveillance work delegation from S&P Global Rating Services.
Crisil Intelligence witnessed momentum in industry research, consulting, credit, and risk offerings, integrating Gen-AI capabilities into its Credit+ ICON solution.

Concerns

The global economy faces challenges with ongoing tariff actions and their potential impact on growth prospects, trade, and inflation.
S&P Global lowered GDP growth forecasts for most countries and raised inflation forecasts for the U.S., anticipating a material slowdown in growth across various economies.
Elevated uncertainty may lead to tighter client budgets and delays in discretionary spending by global clients.
Crisil Integral IQ's performance was muted in 2024 due to curtailed discretionary spending by global customers and the conclusion of a few long-term projects.
The Research, Analytics and Solutions segment's revenues were marginally lower in 2024 than the previous year due to the impact on discretionary spending and project conclusions.

What they filed

Q1 FY27: revenue up 27.5%, net profit up 25.6% 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	812	913	813	843	911 +12%	1,082 +19%	1,058 +30%	1,075 +28%
Expenses	588	626	581	604	648	742	739	768
EBITDA	224	287	232	239	263 +17%	340 +18%	319 +38%	308 +29%
Margin	28%	31%	29%	28%	29%	31%	30%	29%
Other income	21	30	31	24	37	27	36	21
Interest	1	2	6	6	6	5	7	7
Depreciation	16	21	30	32	32	35	39	42
Profit before tax	229	294	227	225	262 +14%	327 +11%	308 +36%	280 +24%
Tax rate	25%	24%	30%	24%	26%	26%	24%	23%
Net profit	172	225	160	172	193 +12%	242 +8%	233 +46%	216 +26%
EPS	23.46	30.72	21.86	23.46	26.41	33.02	31.90	29.60

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

Segment	FY24 Revenue Growth	Q1 2025 Revenue Growth
Overall Company	3.8%	—
Rating Services	—	32.5%
Research, Analytics and Solutions	-0.1%	2%

Capital allocation

high confidence

Dividend ₹8/share (interim)

We've also declared a first interim dividend of INR 8 as compared to INR 7 at the end of quarter one last year.

Guidance & targets

Financial Sector

Bank Credit Growth Financial Sector · Fiscal 2026 · Medium confidence 12%-13%

From 11-11.5% (estimated for Fiscal 2025) today

Bank credit is likely to grow to 12%-13% just Fiscal, compared with 11-11.5% estimated for Fiscal 2025, given three tailwinds viz. the recent supportive regulatory measures, a boost to consumption from tax cuts, and softer interest rates.

— Amish Mehta

Monetary Policy

Repo Rate Cuts Monetary Policy · rest of fiscal 2026 · Medium confidence at least two more 25 bps cuts

Crisil expects at least two more repo rate cuts of 25 bps each in the rest of fiscal 2026.

— Subodh Rai

Bond Market

Bond Issuances Bond Market · 2025 · Medium confidence increased

Hence, we expect increased bond issuances in 2025, added by potential rate cuts, and softening bond yields.

— Subodh Rai

Market context

India's GDP Growth Economy · Fiscal 2026 · Medium confidence 6.5%

Coming to the domestic environment, India's GDP is expected to grow at 6.5% in Fiscal 2026, with a downward bias.

— Amish Mehta

What to watch in Q1 FY26

Macroeconomic and Geopolitical Stability

next quarter / coming quarters

Current Ongoing uncertainty, tariff actions, potential slowdown

Target Increased clarity and stability in global environment

Why it matters

Management links private capex revival and discretionary spending by global clients to this, directly impacting Crisil's business outlook.

Given the geopolitical uncertainty that is there in the market, it may be one reason why private sector capex is not really picking up the way it can. Operating debt is already high. So if you ask me, the condition is favorable, but I think geopolitical situation is something where people are expecting more clarity, more stability before you see a good uptake in private capex.

Risks & concerns

Macroeconomic and Geopolitical Risks
medium

Global developments, ongoing tariff actions, and their impact on growth prospects, trade, and inflation are actively monitored, though no material direct impact has been seen yet.

Management acknowledged
Tighter Client Budgets and Delays in Discretionary Spending
medium

Elevated uncertainty may lead to tighter client budgets and delays in discretionary spending by global clients, impacting growth in segments like Integral IQ.

Management acknowledged
Foreign Currency Risk
low

Significant revenue in foreign currencies creates exchange rate fluctuation risk, but Crisil has a well-structured hedging policy to act as a buffer.

Management acknowledged
People Risk / Attrition
low

As a talent company, Crisil has a proactive approach to people management; attrition rate has been stable and in line with industry trends.

Management acknowledged
Impact of SEBI Regulations on Credit Rating Agencies
low

SEBI's potential guidelines on monitoring capital usage and analyzing company track records are currently in the feedback stage; Crisil will evaluate impact if final guidelines change.

Analyst not addressed

Q&A highlights

6 direct

GAC growth drivers and non-S&P Global business focus Direct

I think the growth has been seen within GAC, we have seen across the portfolio, right, on surveillance delegations, the support that we do on digital transformation, and the entire work that we do for S&P Global Ratings. So it is, I think, supporting them in their growth journey, also supporting on the technology transformation journey that they embark on. When we come to the non-S&P Global Ratings business that we have, I think the focus there is to play to our strengths, which is largely on the analytical side, research side, areas that we have been able to support them, program management, technology, of course, technology transformation, and data analytics.

Clarifies the specific areas driving growth within the GAC segment and Crisil's strategic focus for its non-S&P Global businesses.

Asked by Rajiv Mehta

Crisil Integral IQ positioning for macro turnaround Direct

I think we continue to focus on and looking at the growth segments. And I think both me and Gurpreet, we tried to touch upon some of them. I think it was in the, in the space of asset management, the space of big banks, right, regional banks, I think private market players, I think there are areas of opportunity that we see going forward. And I think we continue to build both our capabilities as well as sales teams to look at building a pipeline, building our presence across these markets to drive growth.

Highlights Crisil's proactive strategy to invest in capabilities and sales teams to capture growth in specific market segments when macro conditions improve.

Asked by Rajiv Mehta

Domestic rating revenue outperformance vs industry Direct

So, as Amish has spoken, you know, there's a clear preference for best-in-class rating in the market and there is a benefit from that. And specifically speaking about recent quarters, we benefited from the uptick in the bond market that we saw in the second half. That was a positive for us. We also benefited from a few large deals that happened in the market. And if you look at mid-corporate space, we are seeing good momentum on the enhancement side. So, that has really helped us.

Explains the drivers behind Crisil's significantly higher growth in domestic ratings compared to the overall bond market, attributing it to quality, market positioning, and specific segment tailwinds.

Asked by Balaji Subramanian

Discretionary spending outlook by global clients Partial

I think it's something which I would say that we are watching closely from, this is largely talking about the larger banks. But as I think Amish mentioned and I think we continue to focus on the growth areas in the whole spectrum, I think private capital investment, GenAl, data analytics I think those are happening. And we're seeing segments like midsize banks, segments like asset managers, both large and midsize continue to invest in options which will make them more efficient.

Provides insight into client spending patterns, indicating continued investment in strategic areas like GenAI and efficiency, even if overall discretionary spending remains cautious.

Asked by Balaji Subramanian

India Inc. capex cycle and reasons for delay despite high capacity utilization Direct

I think there are areas and I'm just going to add to what Subodh said, I think there are areas like renewables, there are areas like EV related within auto, the entire battery space. You look at, I think some of the electronics areas, I think there are investments happening. Of course, infrastructure, everything supporting infrastructure investment is happening. But for everything else, I think like Subodh mentioned, the current uncertainty in the environment with what will happen with tariffs, the direct impact, indirect impact, how that will play out. I think corporates are looking for clarity and certainty before they would end up committing to, I think, capex finance and going forward with their investment plans.

Identifies geopolitical uncertainty, tariff impacts, and the need for clarity as key factors delaying private sector capex despite strong balance sheets and high capacity utilization.

Asked by Krishnan ASV

Gen AI impact on Crisil's business and demand for work Direct

So I think as far as Crisil goes, we are looking at the evolution of Gen Al, large language models, both as an opportunity and in terms of how we can leverage that for efficiency and effectiveness. So we look at efficiency, we are looking at deploying Al to enhance the operational efficiency of our internal processes in the organization where we can, right, where we have the ability to look at areas where we can leverage Gen Al. I think the second is from effectiveness to invest in Al offerings, which will help our clients either in their Al journeys themselves or in Al-led products.

Details Crisil's strategic approach to Gen AI, focusing on internal efficiency and enhancing client offerings, while emphasizing that domain expertise remains critical.

Asked by Abhijeet Sakhare

New brand identity and separate P&Ls Direct

So, these businesses are anyway classified and those are classified in the segment. We monitor all the businesses. That is what I spoke of. So, each of us spoke about the businesses. So, we monitor these businesses very closely.

Clarifies that the new brand identity is a repositioning strategy for cohesive client experience, not a change in financial reporting structure with separate P&Ls for each brand.

Asked by Anuj Sharma

3 min read 7 chapters

Detailed narrative

Q1 FY25 Financial Performance Overview

Crisil reported a resilient performance in Q1 FY25, with overall revenue growing by 10.2% year-on-year over the previous year's corresponding quarter. Profit Before Tax (PBT) and Profit After Tax (PAT) both saw approximately 16% year-on-year growth for the quarter. This follows a modest 3.8% revenue growth in FY24, where PBT grew by almost 7% (or 10.5% excluding a one-off gain from Argentinian Peso devaluation in Q4 FY23) and PAT grew by 3.9%.

Rating Services Segment Outperformance

The Rating Services segment, encompassing Crisil Ratings and the Global Analytical Center (GAC), demonstrated strong growth of approximately 32.5% year-on-year in Q1 2025. This was driven by continued investor preference for best-in-class ratings, an uptick in the bond market in the latter half of 2024, and significant growth in surveillance work delegation from S&P Global Ratings. The GAC also saw strong growth from new engagements and support for S&P Global in new areas.

Research, Analytics and Solutions Segment Performance and Strategy

The Research, Analytics and Solutions segment experienced muted performance in 2024, with revenues marginally lower than the previous year, primarily due to curtailed discretionary spending by global clients and the conclusion of some long-term projects. However, the segment's margin improved by 2.4% in FY24, and Q1 2025 saw a 2% revenue growth and a strong 16% profit uptick. Crisil is focusing on growth areas like private capital, GenAI, data analytics, and mid-sized banks, while also leveraging offshoring and automation trends.

Macroeconomic and Business Environment Trends

The global economy faces challenges from ongoing tariff actions, potentially impacting growth, trade, and inflation, with S&P Global forecasting a material slowdown. This uncertainty is leading to tighter client budgets and delays in discretionary spending. Domestically, India's GDP is projected to grow at 6.5% in Fiscal 2026, and bank credit at 12-13%. Crisil anticipates further repo rate cuts of 25 bps each in Fiscal 2026, which could boost bond issuances.

Private Sector Capex and Investment Outlook

Despite healthy corporate balance sheets, strong debt protection metrics, and 70-75% capacity utilization, private sector capex remains subdued. Management attributes this to geopolitical uncertainty, tariff conversations, and the need for clarity and stability before significant investment. While areas like renewables, EV-related sectors, and infrastructure are seeing investments, overall capex is being delayed by a couple of quarters.

Gen AI Adoption and Crisil's Approach

Crisil is actively exploring Gen AI to enhance client offerings and internal productivity. While widespread adoption in finance is still early, Crisil has integrated Gen AI into products like Credit+ ICON (for credit report drafts) and Fulkrum (natural language query). Management views Gen AI as an opportunity to leverage its domain expertise, improving efficiency and effectiveness without completely replacing existing work.

Brand Identity and Organizational Structure

In January 2025, Crisil rolled out a new brand identity, positioning its businesses (Crisil Ratings, Crisil Intelligence, Crisil Coalition Greenwich, Crisil Integral IQ) under a cohesive umbrella. This repositioning aims to demonstrate a unified enterprise and enhance client experience, rather than creating separate P&Ls for each brand, as businesses are already classified and monitored within existing segments.

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

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