Delivery Pick Newsletter

CRISIL (1919.35, as at June 23, 2017 NSE at the close)

India’s premier credit rating company exhibited a paltry 4.3% YoY.  This is on the back of a sustained weak environment climate and soft credit growth. Bank loan ratings and the same for SME segments performance remained lackluster due to sluggish credit offtake while the corporate bonds have shown some pick-up in demand since March.

As per management guidance this poor demand scenario may continue to prevail due to cut in government subsidies for the SME segment.

Notwithstanding the above, we tend to think the RBI’s push to deepen the bond market would surely be a boost  to the credit rating industry and consequently CRISIL being the market leader would definitely benefit out of it.

In our view, the company’s long term prospects continue to look good and the sustained correction in stock prices from the high of 2500 through 1842 recorded on May 30, gives us a great opportunity to buy this stock at lower levels. From here, the downside risk appears to be fairly limited, and the whole range between 1750 and 1900 is a strong support zone for this stock since early 2014. This makes it all the more appealing as a fresh buy at current levels. there is likely to be a retest of the earlier high of 2500 by the end March 2018.

 

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