1. At a Glance
CARE Ratings Ltd is a top-tier Indian credit rating agency, riding high on its profitability revival arc, licensing muscle, and ESG upgrades. It’s almost debt-free, sits on ₹776 Cr reserves, and still flexes a 25% ROCE—while giving your favorite NBFC a reality check.
2. Introduction with Hook
If SEBI were Hogwarts, CARE Ratings would be the Sorting Hat—deciding which corporate soul goes to Investment Grade heaven or Junkyard hell. And while it’s not conjuring magic, it’s conjuring ₹140 Cr profits with a 39% OPM.
- ROE: 18%
- 3-Year PAT CAGR: 22%
- FY25 EPS: ₹45.85
- Dividend payout: ~39% (down from 89% in FY23… oof)
And yes, they’re now rating countries and carbon footprints. Truly the MBA kid’s dream job.
3. Business Model (WTF Do They Even Do?)
CARE Ratings assigns credit ratings across debt instruments, corporate loans, bonds, and now:
- ESG Ratings (via newly SEBI-licensed CARE ESG)
- Sovereign Ratings
- Subsidiaries in South Africa and GIFT City
Their core revenue still comes from corporate credit ratings, especially from PSUs, banks, NBFCs, and infra cos. No manufacturing, no inventories—just Excel, Excel, and more Excel.
4. Financials Overview
| Year | Sales (₹ Cr) | Net Profit (₹ Cr) | OPM % | EPS (₹) |
|---|---|---|---|---|
| FY23 | 279 | 85 | 36% | 28.12 |
| FY24 | 332 | 103 | 34% | 33.67 |
| FY25 | 402 | 140 | 39% | 45.85 |
Observations:
- 3-year revenue CAGR: 18%
- PAT almost doubled from FY23
- Operating leverage is real and kicking
5. Valuation
| Metric | Value |
|---|---|
| CMP | ₹1,839 |
| EPS (TTM) | ₹45.85 |
| P/E | 40.3x |
| Book Value | ₹269 |
| P/B | 6.8x |
| Dividend Yield | 0.98% |
Fair Value Range:
Assuming 28–35x P/E → ₹1,280 to ₹1,605
Current valuation is rich, but growth + cash pile + SEBI gold pass justify some premium.
6. What’s Cooking – News, Triggers, Drama
- May 2025: 76% jump in Q4 profit—YoY profit at ₹43 Cr
- GIFT City subsidiary approved for international ratings
- ESG Ratings License from SEBI – Hello, climate-conscious money
- Sovereign Risk Ratings launch – basically pretending to be Moody’s
- Warning from SEBI in Dec 2023… but brushed off like dandruff
They’re aggressively evolving beyond vanilla ratings. Think “CARE Ratings 2.0”.
7. Balance Sheet
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity Capital | 30 | 30 | 30 |
| Reserves | 643 | 687 | 776 |
| Borrowings | 17 | 20 | 24 |
| Total Assets | 770 | 842 | 958 |
| Fixed Assets | 107 | 109 | 119 |
| Investments | 44 | 44 | 134 |
Key Insight:
- Debt-free by nature, borrowings are symbolic
- Investments rising—possibly in ESG, tech, and rating tech IP
- ₹900 Cr+ balance sheet, almost all funded by equity
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net CF |
|---|---|---|---|---|
| FY23 | ₹82 | ₹13 | -₹63 | ₹32 |
| FY24 | ₹91 | -₹39 | -₹63 | -₹11 |
| FY25 | ₹123 | -₹58 | -₹54 | ₹11 |
Summary:
- CFO rising steadily = business humming
- Investment outflows increasing (subsidiaries, tech infra?)
- Dividend still paid, though payout dropped in FY25
9. Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROE | 18.0% |
| ROCE | 24.6% |
| OPM | 39% |
| EPS Growth YoY | 36% |
| P/E | 40.3 |
| D/E Ratio | 0.03 |
| CCC (Days) | 29 |
Conclusion:
These numbers scream “capital efficient compounder”, not just a back-office grader.
10. P&L Breakdown – Show Me the Money
| FY25 | ₹ Cr |
|---|---|
| Revenue | 402 |
| Operating Profit | 155 |
| Other Income | 51 |
| Interest | 2 |
| Depreciation | 12 |
| PBT | 192 |
| PAT | 140 |
Other Income = ~25% of PAT
So the investment book’s returns are non-trivial. They’re rating clients… and their own portfolio.
11. Peer Comparison
| Company | CMP ₹ | Sales (₹ Cr) | PAT (₹ Cr) | ROE % | P/E | P/B |
|---|---|---|---|---|---|---|
| CARE Ratings | 1,839 | 402 | 140 | 18.0% | 40.3 | 6.8 |
| ICRA | 6,951 | 498 | 170 | 16.8% | 39.5 | 6.4 |
Observation:
- CARE is cheaper than ICRA on most fronts
- Slightly better ROE and PAT growth too
- Valuations largely in sync = market sees them as equals (for now)
12. Miscellaneous – Shareholding, Promoters
| Category | Mar 2023 | Mar 2024 | Mar 2025 |
|---|---|---|---|
| FIIs | 20.03% | 23.37% | 23.75% |
| DIIs | 23.79% | 26.15% | 29.38% |
| Public | 56.16% | 50.47% | 46.87% |
| No. of Shareholders | 61,050 | 53,140 | 51,395 |
Key Insight:
- Strong institutional interest (FIIs + DIIs ~53%)
- Retail exiting gradually, possibly due to rich valuation
- No promoters—professionally managed
13. EduInvesting Verdict™
CARE Ratings is doing what rating agencies were supposed to do—make money while judging others. With ESG, Sovereign, and Global ratings lined up, they’re diversifying smartly.
But 40x P/E is not for the faint of heart. If you’re rating the stock on “margin of safety,” it gets a BB+ at best.
The business? A clear AA+.
Dividend lover? You’ll want the FY23 version.
Risk-tolerant compounder chaser? This CAREs for you.
Metadata
– Written by EduInvesting Research Desk | 14 July 2025
– Tags: CARE Ratings, credit ratings, ESG license, SEBI, dividend, rating agencies, ICRA, capital-efficient compounders
