CRISIL Ltd Q2 FY27 Results Analysis: RAS Margin Compresses 466 bps, Revenue Jumps 20%

CRISIL Ltd's Q2 FY27 numbers came in mixed, with revenue of Rs. 1,095.16 Cr (+20.18% YoY) and PAT growth of +5.92% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

CRISIL delivered 20.18% YoY revenue growth with Ratings segment up 28.89% YoY at a stable 44.88% margin, but PAT grew only 5.9% as RAS margin compressed 466 bps YoY to 17.25% and expenses outpaced revenue. Management's directional guidance items (GAC margin stability, accelerated renewals normalization) were validated, though no quantitative guidance exists to benchmark against. The RAS margin trajectory and Q4 normalization dynamics are the key watch items.

Key Investment Insights

Key Positives

• Consolidated revenue grew 20.18% YoY to Rs.1,095.16 Cr; 9M revenue up 25.73% YoY
• Ratings segment revenue grew 28.89% YoY to Rs.345.63 Cr with margin stable at 44.88% (vs 45.00% prior year)
• Ratings segment profit grew 28.59% YoY and 14.80% QoQ, driven by surveillance revenue from strong prior-year new ratings
• 9M PAT grew 24.73% YoY to Rs.654.26 Cr
• Third interim dividend of Rs.17/share declared; FY2026 YTD dividends total Rs.36/share
• Bank credit growth running at 14.5-15.1%, ahead of management's ~13% FY2027 projection
• Standalone PAT grew 10.59% YoY to Rs.151.94 Cr

Risk Factors

• RAS segment margin compressed 466 bps YoY to 17.25%, with segment profit down 8.28% YoY and 17.69% QoQ
• PAT grew only 5.9% YoY vs revenue growth of 20.2% as total expenses grew 23.16%
• Professional fees surged 47.7% YoY and depreciation rose 38.2% YoY, pressuring margins
• EBITDA margin contracted 136 bps YoY to 27.53%
• RAS revenue declined 2.72% QoQ as accelerated renewals (US$4.5m in Q1) normalize
• Other income declined 30.35% YoY to Rs.25.75 Cr