Crisil enjoys a dominating position in a highly-competitive industry. Its business of providing rating, research and advisory services is far more insulated than other businesses in financial services domain.
Firstly, this is not a fund-based business like lending. Since the asset base is low, return on capital employed is much higher. Secondly, even in a case of stock market downturn, the demand remains for research and advisory services making it a sustainable business model.
Crisil has always been a zero-debt company with strong dividend paying record. Its current price-to-earning multiple (P/E) of 28 is lower compared to what it commanded in 2005, 2006 and 2007. This shows that the stock has scope to move up further from here.
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