CRISIL Limited: history, ownership, mission, how it works & makes money

A Brief History of CRISIL Limited

CRISIL Limited, a global analytical company, was founded in 1987 as Credit Rating Information Services of India Limited. Initially, it provided credit ratings for various financial instruments and entities. In 2005, CRISIL became a subsidiary of the global rating agency Standard & Poor's (S&P) when it acquired a controlling 66% stake.

The company's service offerings expanded significantly over the years, including research, risk, policy advocacy, and financial analytics. In 2010, CRISIL was recognized as one of the top 100 companies in the Financial Times’ Global Financial Services list. By 2018, CRISIL held around 40% of the market share in India’s credit ratings segment.

Financial Performance

For the fiscal year 2022, CRISIL reported consolidated revenues of ₹2,053 crore, marking an increase of 15% from the previous year. The company posted a net profit of ₹426 crore, reflecting a rise of 13% year-over-year.

Stock Performance

CRISIL’s shares are traded on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The stock price has shown a steady upward trend, with a closing price of ₹3,062.25 as of October 2023. The company has a market capitalization of approximately ₹57,000 crore.

Service Segments

CRISIL operates primarily through three business segments: Ratings, Research, and Risk and Policy Advisory. The Ratings segment contributed around 42% of total revenue in FY 2022. The Research segment accounted for approximately 38%, while Risk and Policy Advisory made up the remaining 20%.

Recent Developments

In 2023, CRISIL announced the launch of a new AI-driven analytics platform aimed at enhancing data analytics capabilities for financial institutions. This initiative is expected to improve operational efficiency and position CRISIL as a leader in innovative financial solutions.

Market Position

As of 2023, CRISIL is ranked among the top credit rating agencies in India, serving over 20,000 clients globally. Its clients include various banks, corporations, and investment firms. The company holds strong competitive advantages due to its established reputation, proprietary methodologies, and experienced analysts.

CRISIL's future outlook remains positive, with forecasted revenue growth driven by the increasing demand for analytics and risk management services in a volatile economic environment.

A Who Owns CRISIL Limited

As of October 2023, CRISIL Limited, a leading global analytical company, primarily focused on ratings, research, risk, and policy advisory services, is a subsidiary of S&P Global Inc. S&P Global acquired CRISIL in 2005 and currently holds a majority stake in the company.

The ownership structure of CRISIL Limited is detailed in the following table:

CRISIL's performance in the market can also be assessed through its stock performance over the past year. As of October 2023, CRISIL's stock price has shown fluctuations reflective of market conditions:

In terms of revenue, CRISIL has shown consistent growth. In the fiscal year ending December 2022, the company reported a revenue of INR 20.78 billion, with a net profit of INR 3.29 billion.

CRISIL's product and service segments play a significant role in its revenue generation:

The company's robust performance and strategic ownership by S&P Global reflect its pivotal role in the global analytics landscape, catering to a diverse clientele with its comprehensive suite of services.

CRISIL Limited Mission Statement

CRISIL Limited, a leading global analytics company, operates with a clear mission to influence the financial landscape by providing stakeholders with analytical solutions, insights, and tools that facilitate informed decision-making. Their commitment revolves around enhancing the quality of financial decisions through data-driven insights.

The company’s mission encompasses various dimensions aimed at maintaining its leadership position in the ratings, research, risk, and policy advisory sectors. CRISIL’s dedication to innovation and customer-centric solutions is reflected in their strategic goals.

Key Components of CRISIL's Mission Statement

• To provide high-quality analytics and advisory services that drive better business decisions.
• To leverage advanced technology and analytical methodologies to deliver superior insights.
• To uphold ethical standards and deliver value to clients, shareholders, and employees.
• To contribute to the development of financial markets and enhance economic growth.
• To foster a culture of continuous improvement and innovation within the organization.

In alignment with its mission, CRISIL has achieved significant financial milestones. For the fiscal year 2022, CRISIL reported a total revenue of ₹2,535 crores (approximately $305 million), demonstrating a growth of 14% year-over-year. The operating profit stood at ₹707 crores, reflecting an operating margin of 27.9%.

The mission statement is further supported by CRISIL's robust market presence and its commitment to sustainability and corporate social responsibility.

Financial Performance Overview

CRISIL’s mission is also reflected in its investment in technology and innovation. The company has allocated a significant portion of its revenue towards research and development, amounting to ₹250 crores in 2022, demonstrating its commitment to staying at the forefront of analytics and advisory services.

Moreover, CRISIL’s diverse service offerings allow it to cater to various sectors such as banking, financial services, and insurance (BFSI), Infrastructure, and Corporate sectors, further solidifying its mission of enhancing financial decision-making capabilities.

The company has established a strong foothold in the global market, with over 1,300 clients worldwide and a retention rate of approximately 90%, showcasing the trust and confidence clients place in its services.

With a workforce of over 2,000 professionals, CRISIL emphasizes creating an environment of inclusivity and collaboration to deliver its mission effectively.

CRISIL’s focus on sustainability is evident in its initiatives aimed at reducing environmental impact, such as targeting a 30% reduction in carbon emissions by 2025, demonstrating its commitment to corporate responsibility and long-term value creation.

How CRISIL Limited Works

CRISIL Limited, a subsidiary of S&P Global, operates as a global analytical company. It provides ratings, research, risk, and policy advisory services, primarily to corporations, financial institutions, and government agencies. The company is broadly segmented into different business verticals which include Ratings, Research, Risk, and Policy Advisory.

Business Segments

• Ratings: CRISIL is recognized for its credit ratings, which assess the creditworthiness of companies and various debt instruments. In FY 2022, the Ratings segment contributed approximately 50% of the overall revenue.
• Research: This includes economic and industry research, providing insights into market trends and forecasts. The Research segment accounted for roughly 30% of total revenue in FY 2022.
• Risk, Policy, and Advisory: This segment provides services in risk management, policy consulting, and compliance. It constituted about 20% of CRISIL’s revenue in the same period.

Financial Performance

For the fiscal year ended December 31, 2022, CRISIL reported total revenue of approximately INR 2,746 crore, marking a growth of 14% compared to the previous year. The net profit for the same period was approximately INR 522 crore, indicating a year-over-year increase of 17%.

Market Position and Share Performance

CRISIL Limited is listed on the NSE and BSE in India. As of October 2023, the stock price was trading at approximately INR 3,200 per share. The market capitalization of CRISIL stood around INR 25,000 crore, reflecting its solid position in the analytical market.

The company maintains a strong return on equity (ROE), reported at 20% for FY 2022, highlighting efficient profitability and shareholder value generation.

Global Reach and Clientele

CRISIL operates in over 30 countries, serving a diversified client base that includes around 1,000 corporations and governmental entities. Its services cater to various sectors, including financial services, infrastructure, and energy.

Recent Developments

In early 2023, CRISIL acquired a technology solutions firm, enhancing its capability to offer better risk management services. This move aligns with the growing demand for advanced analytics in risk assessment and compliance.

The company has also launched new products aimed at small and medium enterprises (SMEs), enabling them access to credit ratings and assessments, which were traditionally available primarily to larger corporations.

Compliance and Regulatory Environment

As a registered credit rating agency in India, CRISIL is subject to regulations set by the Securities and Exchange Board of India (SEBI). The stringent adherence to these guidelines ensures transparency and reliability in its credit ratings.

How CRISIL Limited Makes Money

CRISIL Limited is a global analytical company that provides ratings, research, risk, and policy advisory services. Its revenue generation primarily comes from four key segments: Ratings, Research, Risk, and Policy Advisory services.

Ratings Segment

The Ratings business of CRISIL is one of its primary revenue streams. For the fiscal year ending December 2022, the Ratings segment contributed approximately ₹1,028 crore to the total revenue, representing around 49% of the company’s overall revenue. This segment focuses on providing ratings for various debt instruments including corporate bonds, structured finance products, and mutual funds.

Research Segment

CRISIL’s Research division provides insights and analysis across various sectors. For FY 2022, revenue from the Research segment stood at around ₹748 crore, accounting for about 36% of the total revenue. This includes industry research, economic analysis, and customized research solutions for clients.

Risk Solutions Segment

The Risk segment caters to financial institutions, offering analytics and risk assessment tools. In FY 2022, the Risk Solutions segment generated revenue of approximately ₹260 crore, which is about 12% of total revenue. Key offerings include credit and operational risk solutions, regulatory compliance, and portfolio management services.

Policy Advisory Services

This segment provides advisory services to governments and policy-makers, enabling them to better understand economic conditions and develop policies. In FY 2022, the Policy Advisory Services contributed around ₹50 crore, which is roughly 2% of overall revenue.

Financial Performance Overview

In FY 2022, CRISIL reported total revenue of approximately ₹2,080 crore, a growth of 15% year-over-year. Its net profit for the same period stood at around ₹440 crore, reflecting a healthy profit margin of 21%.

Market Positioning

CRISIL Limited holds a significant market share in the ratings business in India, with a dominant position in corporate ratings and a leading role in structured finance ratings. The company is recognized globally for high-quality research and analytics, which further solidifies its competitive advantage in the market.

Client Base and Growth Factors

CRISIL serves a diverse client base that includes banks, corporations, investment firms, and government entities. The firm’s growth trajectory is bolstered by increasing demand for credit ratings, risk assessment frameworks, and regulatory compliance services, particularly in emerging markets. The company's investment in technology to enhance its analytics capabilities further supports its revenue generation.