Q2-FY16 and H1-FY16 Financial Results D. R. Dogra MD & CEO

Disclaimer

Certain statements in this document may be forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties like government actions, economic developments, and many other factors that could cause the company’s actual results to differ materially from those contemplated by the relevant forward-looking statements. Credit Analysis and Research Ltd. will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Contents

Highlights

Financial & Business Performance

MCR/CDQI

Economic Backdrop

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Highlights : Q2-FY16 • Growth in Financial indicators – Highest ever Rating revenue of Rs 77.66 crore and Operating profit of Rs 54.77 crore – Growth in operating income recorded 5.35% increase in Q2-FY16 over Q2-FY15 – Growth in rating income of 4.81% over Q2-FY15 – Fall in expenditure of 2.98% – Operating profit margin improved to 70.01% from 67.44% in Q2-FY15 – EBITDA margin at 72.06% and PAT margin at 47.05% in Q2-FY16 – 758 new clients added during Q2-FY16

• Business profile – Total Volume of debt rated recorded a significant increase of 13.7% to Rs 2.41 lakh cr in Q2-FY16 as against Rs 2.12 lakh cr in Q2-FY15. – Total number of instruments rated were 1,845. Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Highlights : H1-FY16 • Strong financial performance continues…. Growth in operating income of 8.33% over H1-FY15 Growth in rating income of 7.80% over H1-FY15 Increase in expenditure of 1.31% Operating profit margin improved to 61.47% from 58.80% in HiFY15 – EBITDA margins at 64.52% and PAT margins at 41.99% in H1-FY16 – 1,466 new clients added during H1-FY16 – – – –

• Business profile – Total Volume of debt rated stood at Rs.5.06 lakh crore in H1-FY16 as against Rs. 4.51 lakh crore in H1-FY15. – Total number of instruments rated were 3,251 in H1FY16 against 2,740 in H1-FY15.

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Contents Highlights

Financial & Business Performance

MCR/CDQI

Economic Backdrop

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Financial Performance Rs crore Rating Revenue

Q2-FY15 Q2-FY16 Growth (%)

H1-FY15 H1-FY16 Growth (%)

74.09

77.66

4.81

116.51

125.59

7.80

0.17

0.57

242.71

0.43

1.08

151.16

Total Revenue

74.26

78.23

5.35

116.94

126.67

8.33

Other Income

22.69

2.22

-90.19

37.52

5.15

-86.28

Total Income

96.95

80.45

-17.01

154.46

131.82

-14.66

Total Expenses

24.18

23.46

-2.98

48.18

48.81

1.31

EBITDA

74.03

57.97

-21.69

108.95

85.05

-21.94

Operating profit

50.08

54.77

9.37

68.76

77.86

13.24

PAT

52.41

37.85

-27.77

79.00

55.35

-29.94

EBITDA margin

76.36%

72.06%

70.50%

64.52%

Operating Profit margin

67.44%

70.01%

58.80%

61.47%

PAT Margin

54.06%

47.05%

51.14%

41.99%

Other operating Revenue

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Financial Performance : Q2-FY16 Total Expenditure 25

78 Rs. Cr.

Rs. cr.

Total Revenue 80 78 76 74 72

Rs. crore

74

24

24 23

24 23

Q2 FY15

Q2 FY15

Q2 FY16

Operating Profit 56

PAT 55

60

52

Rs. Cr.

Rs. Cr.

54 52

Q2 FY16

50

50

38

40 20

48

0

46 Q2 FY15

Q2 FY16

Q2 FY15

Q2-FY16 & H1-FY16 Analyst Presentation

Q2 FY16 November 3, 2015

Financial Performance : Q2-FY16 Operating profit margin (%) Q2-FY16 Operating profit margin increased to

71% 70% 70%

70% mainly due to reduction in cost &

69%

increase in volume of new debt rated by

68%

13.68%.

67%

67% 66% Q2 FY15

Q2 FY16

PAT Margin (%)

Q2-FY16 PAT margin stood at 47% reduced from

55%

54% mainly due to lower investible surplus and

50%

also most investments in FMPs for a tenure of

54% 47%

45%

three years, income on which can be booked only on maturity.

40% Q2 FY15 Q2-FY16 & H1-FY16 Analyst Presentation

Q2 FY16 November 3, 2015

Financial Performance : H1-FY16 Total Revenue 130

Total Expenditure

Rs. Cr.

Rs. Cr.

49

49

127

125 120

Rs. crore

117

115

49

48

48 48

110 H1FY15

H1FY15

H1FY16

PAT

Operating Profit 80

78

Rs. Cr.

Rs. Cr.

75 70

69

65 60 H1FY15

H1FY16

H1FY16

100 80 60 40 20 0

79 55

H1FY15

Q2-FY16 & H1-FY16 Analyst Presentation

H1FY16 November 3, 2015

Financial Performance: H1-FY16 Operating Profit Margin (%) 62%

61%

61% mainly due to lower expenditure &

61%

increase in volume of new debt rated by

60% 59%

H1FY16 Operating profit margin increased to

59%

12.20%.

58% 57% H1FY15

H1FY16

PAT Margin (%) H1FY16 PAT margin reduced to 42% from 51%

60%

42%

mainly due to lower investible surplus and also

40%

most investments in FMPs for a tenure of three

20%

years, income on which can be booked only on

0%

maturity.

51%

H1FY15

Q2-FY16 & H1-FY16 Analyst Presentation

H1FY16

November 3, 2015

Business Performance Total Active clients 11,200 11,000 10,800 10,600 10,400 10,200 10,000 9,800 9,600 9,400 9,200

10,950

10,332 9,828

Mar'15

Jun'15

Sept'15

* end of period data Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Business Performance: Q2-FY16 Volume of debt rated

Rs. Lkh crore

3 2.5

2.12

2.41

2 1.5

1.17 1.24

1

0.74

0.97

0.5

0.21 0.20

0 Bank Loan Ratings

Long term

Q2FY15

Short & Medium term

Total

Q2FY16

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Business Performance: Q2-FY16 No. of Instruments rated 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0

1,845 1,656 1,466 1080 455 272

Bank Loan Ratings

88 80

33 27

Long term

Short & Medium term

Q2FY15

others

Total

Q2FY16

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Business Performance: H1-FY16 Volume of debt rated 6 5.06 Rs. Lkh crore

5

4.51

4 3 2

2.01 2.04

2.11

2.56

1

0.39 0.46

0 Bank Loan Ratings

Long term

H1FY15

Short & Medium term

Total

H1Y16

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Business Performance: H1-FY16 No. of Instruments rated 3,500 3,000 2,500 2,000 1,500 1,000 500 0

3,251 2,740

2,419 1,799 751 651

Bank Loan Ratings

135 129

55 52

Long term

Short & Medium term

H1FY15

Others

Total

H1FY16

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Contents Highlights

Financial & Business Performance

MCR/CDQI

Economic Backdrop

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Ratings Movements Credit quality of domestic rated firms/entities remained the same during the year H1FY16 as indicated by the MCR. The Modified Credit Ratio (MCR) remained unchanged at 1.11 in H1-FY16 compared to H1-FY15.

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

CARE Ratings Debt Quality Index The CDQI dropped by 0.48 points in July’15. However, the decline in the subsequent months moderated to 0.40 points and 0.01 point for Aug’15 and Sept’15 respectively. This downward movement in the index clearly indicates the deteriorating quality of debt over the past few months.

Movement in CDQI -Mar'12 to Sept'15 101 100 100 99 99.48 98 97 96 95 94 93 92 91 90 89 88

96.08 93.91 92.54

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Contents Highlights

Financial & Business Performance

MCR/CDQI

Economic Backdrop

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Economic Backdrop Reviving Industrial Growth (AprAug’15)

GDP growth expected at 7.5 -7.6% for FY16 vis-a-vis 7.3% in FY15 9

8.4 7.5

8 7

6.7

6.6

7.0

5

%

%

6 4 3 2 1 0 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16

5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

4.4

4.2

3.0 2.1

FY15

IIP (5 mths)

Q2-FY16 & H1-FY16 Analyst Presentation

FY16

Core (5 mths)

November 3, 2015

Economic Backdrop…. (contd.) Depreciating exchange rate

Easing Inflation

6.0

4.9

5.0

5.4 3.7

4.4

3.7

62

4.0

62.5 63

0.0

-2.0 -4.0

63.42

63.65

63.5 Rs/$

%

2.0

-2.43

-2.20

64

63.76

64.5

-2.13

65

-4.00 -6.0

-4.95

-4.45

65.5 66

CPI

65.08

65.67

WPI

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Economic Backdrop…. (contd.) Increased CP Issuances

Lower growth in demand for credit 0.9

600,000

0 -1

Credit

Industry -0.7 -1.3

-2 FY15 (Apr-Aug'14)

Services

552,190

400,000 200,000

-1.8 -1.6

0

FY16 (Apr-Aug'15)

H1 FY15

H1 FY16

Corporate Debt raised 300,000 Rs. crore

%

1

1.3

743,090

800,000 Rs. Crore

2

242,720

200,000 100,000

145,291 4,418

244,758 149,709

2,038

0 Public Issue

Private Placement

H1FY15

Total

H1FY16

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Economic Backdrop…. (contd.)

Repo rate

Base rate

364- CP rate

10-yr G-sec Yield

* As on 23rd Oct’15

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015

Oct-15*

Aug-15

Jun-15

Apr-15

Feb-15

Dec-14

Oct-14

Aug-14

Oct-15

7.25 6.75

Jul-15

7.50

Apr-15

Jan-15

7.75

11 10.5 10 9.5 9 8.5 8 7.5 7 6.5 6 Apr-14

%

9.8 9.7 9.7

Oct-14

Jul-14

Apr-14

10.50 10.00 9.50 10.0 9.00 8.50 8.00 % 7.50 8.00 7.00 6.50 6.00 5.50 5.00

10-yr G-sec yield & 364-CP rate

Jun-14

Repo Rate & Base rate (%)

Thank You

Q2-FY16 & H1-FY16 Analyst Presentation

November 3, 2015