Total revenue grew by 13.5% from Rs 42.68 crore in Q1-FY15 to Rs 48.44 crore in Q1-FY16 with rating revenue increasing by 13% during this period. Operating profit witnessed an increase of 23.6% from Rs 18.68 crore in Q1-FY15 to Rs 23.09 crore in Q1-FY16. Other income decreased by 80.3% from Rs 14.84 crore in Q1-FY15 to Rs 2.92 crore in Q1- FY16 mainly because of the roll-over of sizeable investments in Fixed Maturity Plans (FMPs).
The income from these FMPs will be booked in the year of maturity. Consequently, Total Income decreased by 10.7% from Rs 57.51 crore in Q1-FY15 to Rs 51.36 crore in Q1-FY16. Total expenses increased by 5.6% as the staff count increased from 592 as of June 30, 2014 to 627 on June 30, 2015. Hence, while Operating Profit margin for Q1-FY16 improved from 43.8% to 47.7%, Net Profit margin for Q1-FY16 was down from 46.2% to 34.1% due to lower income from investments.
Business volumes were higher and the volume of debt rated increased from Rs 2.39 lkh crore to Rs 2.65 lkh crore during this period. The higher volume of debt rated was also manifested in the number of instruments rated which increased from 1,085 to 1,406. The number of clients on the portfolio is now 10,332 (9,828 as of March 2015). 708 new clients were added in Q1- FY16, against 510 in Q1-FY15.
During this quarter, CARE Ratings introduced two new products, rating of ITIs (Industrial Training Institutes) and grading of REITs (Real Estate Investment Trusts). CARE has also been empanelled to assign ratings to tourism facilities in Karnataka by the state government.
D.R. Dogra, MD & CEO, CARE Ratings said, “While our rating income has increased, investment income has been and will continue to be affected by our policy to rollover the investments in FMPs last year. Hence, our operating profit margins have improved while net profit margin has declined”.
“We still have not witnessed a discernible improvement in the macro investment climate so far, with industrial growth being lower and credit not picking up. We are looking for a reversal in the next few quarters based on some grass root signs which can revive the investment cycle”, he added.