The share price of this prominent credit rating agency in India jumped by 16 percent on Thursday, driven by an impressive 124 percent quarter-on-quarter increase in net profits. This rise was also bolstered by strong revenue growth reported in its most recent quarterly results.
Share Price Movement
In Thursday’s trading session, CARE Ratings Ltd share price reached an intraday high of Rs.1,380.00 per share, representing a 18 percent increase from the previous close of Rs.1,172.50 per share. The share price has adjusted since then and is currently trading at Rs.1,357.20 each.
Rationale for the Rise
The notable increase in the stock price was driven by substantial growth in revenue and net profits reported by CARE Ratings Ltd for the recent quarter.
In its latest filing for the quarter ending September 2024, the company announced a 22 percent rise in revenue, reaching Rs.117 crore compared to Rs.96 crore in Q2 FY24. On a quarter-over-quarter basis, revenue grew by 48 percent from Rs.79 crore in Q1 FY25.
During the same period, net profit surged by 30.6 percent to Rs.47 crore in Q2 FY25, compared to Rs.36 crore in Q2 FY24, and increased remarkably by 124 percent from Rs.21 crore in Q1 FY25.
Regarding return ratios, return on capital employed (ROCE) currently stands at 20.6 percent, while return on equity (ROE) is at 14.5 percent. The stock is trading at a P/E (Price to Earnings) ratio of 35.5, which is lower than the industry average of 45.3. The company also boasts a strong current ratio of 7.79 and a low debt-to-equity ratio of 0.03.
Management Commentary
Commenting on the results for Q2 and H1FY25, Mehul Pandya, Managing Director & Group CEO of CareEdge, said, “The company has shown good performance in ratings as well as non-rating businesses. In H1FY25, the contribution of non-ratings business to total consolidated revenue from operations has improved to 9.5 percent even as the ratings business witnessed a strong growth of 19 percent.Overall, CareEdge is well poised for continued success and growth, driven by our strategic pillars and an unyielding commitment to excellence.”
Global Expansions
Additionally, the Managing Director of CARE Ratings Ltd announced the company’s global expansion, marking it as the first Indian rating agency to enter the sovereign and global scale ratings market with ratings for 39 countries at the CareEdge Global IFSC Ltd launch.
CareEdge Africa and CareEdge Nepal reported strong business growth, while CareEdge ESG recently released its first rating, promoting sustainability. CareEdge Analytics and CareEdge Advisory have also improved their performance.
Company Profile
CARE Ratings Ltd, originally established as Credit Analysis & Research Ltd in 1993, is one of India’s foremost credit rating agencies. CARE Ratings provides a wide array of credit ratings across various sectors, including manufacturing, infrastructure, banking, and financial services
Written by – Siddesh S Raskar
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