The company held its AGM on 17 April 2019 and was addressed by Ashu Suyash MD
Key Highlights
Ratings delivered strong growth in CY 18 and also in Mar 19 quarter due to improved market share and strong client engagement. Within Ratings, Coalition ratings led strong growth due to new client addition and higher requirements of analytics.
In CY 18, overall bond issuance was lower due to increasing interest rates and other macro conditions. Expects CY 19 to be a good year for bond issuance and capital market offerings. Corporate bond issuance and securitisation market was strong in Mar 19 quarter. Securitisation volume was very strong and grew by 80% YoY albeit on lower base of last year. The growth remained muted for past 3 years and expects securitisation growth to rebound strongly from here on.
The liquidity squeeze which was there in H2 FY 19, more or less stabilized by end of Mar 19. However due to elections, some tightness is visible. Expects liquidity to ease off further as year CY 19 moves on.
Focus on productivity and strong growth in high margin large corporate segment lead to better margins.
Overall new clients, new product offerings and more analytical ratings led to better CY 18. Expects ratings to continue to do well in CY 19 as well.
In research service division, the global risk analytics industry is seeing a decline in demand for select risk offerings because of changing regulatory milestones for comprehensive capital analysis and review as well as better preparedness across large banks. USA, EU and Asian countries are seeing the changes in regulatory paradigm. Comprehensive analysis, stress tests, international finance reporting standards, financial instrument derivatives etc are some of the areas where regulations are changing for the better.
While this has led to decline in volumes in Mar 19 quarter, and some more de growth is expected in June 19 quarter as well, the demand is expected to strongly rebound from July 19 onwards.
While this has impacted growth in the research segment, demand for credit risk and change management services is increasing as clients emphasis their front office, risk and finance platforms.
Also, with the changing regulatory milestones will bring in more complex and transparency in overall international finance and banking transactions which in turn would require higher analystics and in turn will mean more business for the company. So management is not worried at the recent fall in research segment and continues to remain optimistic as the year progresses.
Company would continue to invest in new products and expects the business momentum to improve going forward.
Infrastructure advisory segment was affected in CY 18 due to additional provisions on receivables. The company took a cautious call and prudently provided for all the foreseeable losses in receivables in this segment. CY 19 should see better volumes and growth from BFSI and infrastructure segment. New client addition in US and Middle East markets will help in better volumes going forward.
Adverse currency movements, increasing cyber risks and disruptive technology environment are some of the risks that the company has to deal with. Forex losses in Mar 19 compared to forex gain in Mar 18 quarter impacted the bottom line in Mar 19 quarter.
Tax rates will be slightly lower due to lower tax rates in US.
Overall expects the H2 of CY 19 to be better than H1 as volumes improve and better regulatory clarity emerges in international markets.
Company will continue to deliver on strong payout ratios going forward as well. |