Thank you, sir. We would now like to open the floor for questions. The first question is from the line of Harsh Shah from HSBC Asset Management. Please go ahead.

Yes, good evening, gentlemen. Thank you for the opportunity. Just a few questions on Q1 results, and then I have a couple of questions on an overall strategy basis. That Q1, you had a heavy quarter last year, and because of which this quarter was a bit benign. On top of that, is there any slowdown that is being witnessed in this quarter, which has also led to a little bit of comparatively sluggish numbers? And if yes, will that slowdown also persist in terms of numbers throughout the calendar year '24 also?

So, I think, like I mentioned, Harsh, that in the global environment, we are seeing some slower decision-making and impact on discretionary spend by our global financial clients, which has had an impact during the quarter. And I think we will continue to see that play out for the next few months or depending on when the decision-making cycle turns around for discretionary spend. But to address that from our perspective, I think we have put a strategy in place to look at the white spaces, to reach out to stakeholders, identify areas of opportunity on the risk regulatory side, data analytics, sustainability, private markets, and create new offering and solutions, which we try to meet up with our existing stakeholders within the banks as well as the new stakeholders that we are looking at and new clients. So, there is a plan that we have put in place. So, I think those are some of the actions that we are putting in place to help address the challenge which might be there in the environment, given the impact on discretionary spend by some of our global clients.

The line for the current questioner seems to have dropped from the queue. So, we will move on to the next question. The next question is from the line of Nirali Gopani. Please go ahead.

Hi. Thanks for the opportunity. So, my question is on the research division. So, if we see last few quarters, the margins have been very volatile, ranging from 18% to 24%. And this quarter, it was around 16%. So, what should we consider as a steady -state margin when it comes to the research services?

I think, Nirali, you should always look at the annual margin, not look at quarterly margins. So, from our perspective as an organization, our focus is to grow margins across all our businesses on a consistent basis. I think that is where we continue to foc us. We continue to build our IP. We continue to build our domain solutions, working with our clients to create that impact. So, I would request you to look at the annual margin numbers and not look at the quarterly numbers because there would be various aspects which are sitting in quarterly numbers. I think it is always better to look at the annual margin profile.

Okay. And you have talked about this global uncertainty and we all know what is going on globally. So, given the situation, should we expect some growth in the research division in this calendar year or maybe next calendar year? Some outlook would be helpful.

I think we do not give any forward-looking outlook, Nirali, as you are aware.

I do not want anything quantitatively. Any qualitatively, if you can talk about it, it would be helpful.

I think it is very clear. Our endeavor is to grow as an organization across all our business segments in all geographies that we operate. I mean, we are very focused on driving growth, on accelerating growth and that is what we will be focused on.

Perfect. Thank you.

Thank you. The next question is from the line of Harsh Shah from HSBC Asset Management. Please go ahead.

Yes, sorry. My line got dropped. I hope I am audible right now.

Yes, Harsh. We can hear you.

Yes. So, just to the previous participant's question, I was alluding to that also earlier that barring quarter -to-quarter, you always mentioned that we should look at the company on a yearly basis and also exhaust global slowdown. Do we have enough arsenal at our disposal that we can have a double-digit growth and also margin improvement on a full year basis?

So, Harsh, I just mentioned some time back that we do not discuss forward-looking outlooks. So, I will not be able to comment on that. However, I mentioned that as an organization, our focus is to drive growth and continuously improve margins. So, that is something that we will continue to work as an organization.

Okay. And just as an organization, do we have a correlation of how a sector, let's say BFSI, IT spends are there versus how the discretionary spends of those financial institutions also have with CRISIL because few of the IT companies are saying that financial year 2025 for BFSI globally should be better for them than financial year 2024.

So, the spend of global institutions on CRISIL as a percentage will be miniscule compared to what they would spend on the large IT companies. And if you look at the number of global institutions that I think we can potentially work with is pretty large.

Understood. And the last question from mind is in terms of E SG rating license, where are we and at what stage we are?

So, we have applied for the license as we have disclosed publicly and we are awaiting feedback from SEBI on the next steps.

And is there a deadline for that before that date SEBI has to inform everybody?

No, there is no deadline as we understand.

Okay. That's it from myself. Thank you and all the very best for CY '24.

Thank you.

Thank you. The next question is from the line of Anuj Sharma from M3 Investment. Please go ahead.

Yes. Thank you for this opportunity. Two questions. One is the merger with IHS Markit has been for some time. Now, in terms of opportunities, in terms of outsourcing, could you just help elaborate what is the opportunity as the journey yet started or there's not much there to look forward to? That's question number one.

So, you are asking about the merger of IHS Markit with S&P Global, I'm assuming?

That's right.

So, I think as you would be aware that there is a large footprint which IHS Markit and S&P Global have in India beyond CRISIL, right? And I think we continue to look for opportunities as CRISIL. So, we work very closely with the S&P Global Ratings. We have a captive which is the Global Analytical Center where we are working very closely with the S&P Global Ratings business. We are looking for opportunities to partner with different divisions of S&P Global and identify opportunities where we can partner based on the capabilities that we have. And that's something that we are wanting to grow in terms of business. So, that is something that we are continuously evaluating and working on. We have had some success in some of the businesses and I think that's something that we will continuously evaluate.

All right. But would it be fair to say that a large portion of opportunity will flow down to the captive which is beyond CRISIL and has it started already flowing through or you believe that will be equally divided between the two entities?

No. So, I am unable to comment on the strategy of IHS Markit . I can only comment about CRISIL. And our dialogue across the organization beyond S&P Global Ratings is to evaluate based on the capabilities that we have and see how we can leverage, how we can demonstrate value for the stakeholders and be able to leverage the value.

All right. And my second question is, it's always been a competitive market. But what are the trends in pricing and yields in the Ratings segment? Just some thoughts into that segment?

Yes. I mean, Ratings has been a competitive market throughout. So, I guess it isn't very different. That's, I mean, I'm not sure what you are exactly asking for.

I'm trying to understand since the pricing was very competitive due to some stability and improvement in the size of market. Are we able to see some pricing power along with the competitors?

So, okay. So, if the question is, yes, in a growing market, there is enough pie for everybody. So, I think what we've seen, we saw a couple of very difficult years after the IL&FS and the DHFL incidents. Incidentally, we didn't rate both of them. But I think that they were tough for the market. The last few years, we've seen growth in the industry across. So, that has kind of created enough opportunities for everybody.

All right. But if I may push on, is it the benefit is slowing down to the yields and pricing or it is just volume as yet?

I think it's difficult sometimes to strip that out because you work with existing customers. Obviously, there is an operating leverage there and there are new customers coming in. But I would say when the market grows, I think it helps both sides.

All right. Thank you so much.

Yes. Hi. Thanks for taking the question. First was I want to understand for last year, could you help with the split in the R atings segment between bonds, bank, and bonds directionally if you want to split?

We don't give a segmental split, sub-segmental split of our businesses within a segment, Naysar.

It's actually not also easy to do it. I mean, typically, you will have – I mean, some of it is issue-based pricing, some of it is pricing, which is bulk. So, people will shift between bond and capital market and sometimes – I mean, it is not easy for us t o put that out. Ourselves as well. I mean, I'm not saying that from public domain, but internally also, if you divide it, it is – we can argue it's best in apportionment process, but usually, sometimes I'm not able to make that differentiation.

If you're asking about GAC, Naysar, if you look at the 2023 annual report, you will see that GAC's related party transactions are separately listed, and that comes to roughly around 10%-odd of our total consolidated turnover of the company, that is available for you in our annual report.

No, no, that – Yes, that is that. No, that's fair. Okay. Second question was, in terms of the margins, and you spoke about, it a bit, but can you just give some more directional, sense, like, are we face there some kind of margin pressure that we are faci ng on the research side? And secondly, can you give split bit of the employees between how many are in India versus outside?

We do not give a headcount split, Naysar, but about the bulk of our employees, 75% to 80% of our employees are in India. We do not give a business -wide or segment-wide split. As far as margins are concerned, again, I think Amish alluded to this, that by one quarter on margins will not be reflective or in any way symptomatic of the underlying potential of the health of the business. If you look at the way we performed in '22, – the research segment had 21% on margins. We were at, again, a 21% margin in '23. The idea across all our businesses and our segments is to have revenue growth along with margin expansion. There will be cycles in between where we will see margins getting hit, and when I say hit, I mean the expansion of margins might see some level of slowdown, but as an organization, as a board, and as a management, we are very clear that every business that we run has clear potential of revenue growth and margin expansion.

Okay. And last question is, do you calculate, track your market share in the bond ratings or something like that? Any way there is a way for you to track what is your market share, and do you disclose that?

So, the bond market, I think there are external vendors like Prime Database who kind of put that out, so we do track from them. The numbers, as I said, will vary based on quarters and on the volume set up, but on an annual basis, we typically track between 60% to 70% is what it will move, but please understand it's a – bond market is a dual- rated market. The denominator isn’t 100.

Okay. And bank ratings, there's no way to track?

Bank ratings, bonds, you can identify bond, each bond, there's an ISN, you can, I mean, external agencies can do it. Bank ratings is difficult because some of the larger players can have multiple rating agencies and may not be exclusive for every loan they take, so that's difficult to track. I mean, you can estimate, but it's difficult to track.

Okay. Thank you so much.

Thank you. The next question is from the line of Bhavin Pande from Athena Investments. Please go ahead.

Good evening everyone. Am I audible?

So, you're sounding a bit muffled. In case if you're using the speakerphone, may we request you use the handset mode, please?

I hope I am clear now.

Yes sir. Please go ahead.

So, I was just wondering, in terms, -- as we have cited in the annual report, the growth in terms of companies that were issuing was around 6% and the overall growth in the market was around 24%, 25%. So, for us to forecast specifically for the Ratings business, what, in your opinion, would drive growth? Is it that more the number of issuers and the amount of issuance that they're doing would keep going simultaneously or it could be either of the two?

So, your voice was muffled a bit. But if you're asking me, how does the growth in revenue correlate with the bond and the bank loan market. Yes, I think there are two or three levers here. One broadly will be the issuance volumes which are there in the market on the bond side, as well as the bank loans taken or additional limits taken by the corporates. That's one side. And obviously also the multiplication is what you get as yield from that customer. And obviously the third lever is you may have price arrangements with certain customers based on because some are very large, they're based on aggregate volumes and doesn't really correlate with whether you do bond or bank loan. I think that's the third aspect. And the fourth, which I would also say, there is a good amount of surveillance revenue we as rating agencies contract. So that is a good proportion of our revenue which is independent of what's happening today in the market.

Okay. But sir, what does specifically hinting at was in terms of number of players and the quantum of issuance, do you think is it that this -- what are the total quantum is it's driven by a few select players or do you think that over time it is changing and more number of players are also contributing to the quantum that is going up?

That's right. So, I think it isn't usually unidirectional. We've seen years where there were a large number of players who come to the market and the more the number of players who come to the market I think usually bring incremental revenue. We've seen years where actually the number of players has dipped. Over the last 2 years, we've seen increase in the number of players who are tapping the bond market per se. And so that has helped on that side, but on the other side, on the bank loan side, we've seen some of the smaller players dropping out of the market too. So, the overall number of companies used to rate as rating agencies put together over the last 5, 6 years have decreased. They stabilized about a year or two back, but until about 2 years back we saw numbers declining there which is the smaller companies were dropping out of the ratings.

Okay. That was really helpful. And secondly, on the interest rate cycle, of course, you denied giving any specific guidance, but just from a perspective that even in a worst case scenario, we start seeing a rate cut cycle maybe a couple of quarters from now, would you sort of be more optimistic about this specific segment or as you cited in the previous remark that you would want this business sort of to be independent of the market cycle?

So, market cycle in financial industry we can't be, but let me give you a perspective. What we get paid for, what our revenues are linked to is aggregate borrowing in the economy. Now, if it happens to the bond side, you have the bond market as a proxy, but the company needs to borrow and the bond market isn't favorable, he'll go to the bank and borrow. So, it isn't the fact that the interest rate cycle comes down. If the aggregate borrowing in the economy increases, yes, it would be accretive. With typically what we track is with the interest rate cycle when it comes down, we tend to see that companies will start favoring the bond market more than the bank loan side, because the bond market actually factors in the declining interest rate faster. And so it does for the increased interest rates too, but because it moves faster, so we anticipate that to pick up and bond market is usually a little bit more lucrative than the bank loan. So overall, yes, if the interest rate cycle turns around, our sens e is that's probably second half of the year, we would see more activity in the bond market.

Okay. Wonderful, sir. And just one last thing on the Research business one could -- at least my understanding of the commentary that was presented in the annual report was that the business is mostly based around the increased regulatory requirements that are in the financial institutions on the tech side of things. But also one could see the mode that CRISIL is higher in terms of the number of analysts it has and the think power it has. So when you look at this business, is it more that is it that the regulatory requirement that would of course keep going up over tim e would be more gripping for the business or is it that the think tank that the CRISIL has in terms of the sectoral coverage it has will also contribute to the growth?

So there are three parts to the research analytics and solutions segment out here. One is the domestic non-ratings research Market Intelligence and Analytics business that we have, where we cover the entire economy to sectors, to corporate coverage in terms of research solutions, consulting where we work on funds and fixed income. We support the asset management industry. So, there's a large coverage which happens. This is largely India which is a non-ratings business. The second part is the global benchmarking which Duncan spoke about where we have benchmarking for corporate investment banks, global investment banks, for commercial banks largely in the US and other parts of Asia and now looking at Europe. And the third part is working on the investment management firms where we have the offering of voice of customer. So, I think there are different offerings, and this is a combination of Coalition Greenwich that's the business where we work, and this is again another IP business that we have. The third part of the business is where we do the G lobal Research and Risk Solutions where Jan Larsen is heading that business and he spoke about it, where we do work across research for global buy side, sell side firms. We do work on the credit lending side. We do work on the risk and regulatory side which you are referring to wh ere we support global clients on risk and regulatory. And we also support global clients on data analytics, sustainability, on change transformation, digital transformation. So, I think there are a set of solutions that we work on for our clients. And depending on the need from a risk and regulatory lens. If there are larger regulations coming in for global institutions it augurs well from our perspective because then the clients would need help for solutions and for analysts to come and help them. Whereas if the environment becomes benign and the regulations go down, so the demand for those services will go down. But for the other parts of the business that you are talking about, those parts of business will continue to grow, but they will then become largely discretionary. And I think that's where clients make calls and then look at tech spending. So, if clients are able to defer a decision for a quarter or two in a tough time, they would make that decision. So, I think that's the nature of the business that depending on what part of the solutions and business you are dealing with, the stakeholder you're dealing with, you will have that impact.

Okay. That was really helpful. Thank you so much, sir and good luck for the year ahead.

Thank you.

Thank you. The next question is from the line of Varun Bang from Aegon Life. Please go ahead.

Hi, thanks for the opportunity. My first question is on the GAC side. So, we've talked about some of the tailwinds in the GAC segments and I think there we are also expanding scope of services. So, would you say the value addition would be much higher in some of the newer opportunities vis -a-vis what we have been doing over the past many years?

So, I think the nature of the work remains analytical. I think we are expanding on different streams of the businesses, different areas of the workflow if you were to look at across the different businesses that we are talking to. Within ratings itself, we have expanded towards different workflows, supporting the ratings business in different areas. The nature of the work remains analytical across this team or support on the technology support side. And these are the large teams that we are working on for the ratings division.

And, I mean, is there a way to know, I mean, how do we track this segment? How do we know if CRISIL is able to add more value, because we don't know the billing rate there?

So here, Varun, we work on a cost-plus mark-up model which is benchmarked for the nature of the work that we do. Because as this is being exported so you have transfer pricing requirements. We have other governance requirements. So, I think this is something we have been working. And this is, as I said, we've done 20 years of partnership for GAC with S&P Global. So, if you want to ask me how we measure the fact that you have a global client like S&P Global with whom we have done 20 years of partnership, has grown from strength to strength. We have expanded across the workflows in terms of support after starting small. So now we support all the geographies. We support all their products from an analytical support perspective across on the data support side, technology support side. I think that, to me is the measure of success that how we have expanded across the different businesses that the S&P Global ratings have. So when they were entering into sustainability, finance, we are supporting them on that business. So I think every new business that they would enter, question is whether we are able to support them or no, depending on the need. I think, of course, depending on the regulatory requirements because these are regulated businesses. Please understand that ratings globally is a regulated business and there is a definition of what work can be outsourced, what cannot be outsourced. So, I think our endeavor is to maximize what can be outsourced and see, make sure that we deliver value to our clients.

Okay, got it. And one question on the rating side. So which are the top three sectors for us in the rating business? And what would be the revenue split between large corporate and MSME ballpark numbers if you can share?

So MSME is a very small, anyway, the MSME doesn't come in ratings at all now. So, SME grading, if you are asking for, I think we don't classify that it's a part of the Market Intelligence and Analytics segment. So what sits within ratings is what we do as ratings.

Predominantly it is large corporate?

Large and mid-corporate. So, I mean, difficult to put the sector, it depends on which borrows, but I think the larger ones are the financial services, non-banks, banks. Infra has picked up over the last few years and manufacturing is a large segment, so I mean, it's difficult to classify.

I mean, if you look at the number of companies we rate, I would say across segments from large conglomerates to across different segments. I think that would give you a perspective.

Okay, got it. Thanks.

Thank you. The next question is from the line of Rajiv Mehta from YES Securities. Please go ahead.

Yes, hi. Good evening and thank you for giving the opportunity. My first question is on the GBA business. So can we comment on sustainability of growth witnessed in GBA business despite the challenging macro? And how is the business pipeline? See, I'm trying to check whether there was any lagged positive impact of any business one in the preceding quarter and hence Q1 looked pretty good for us. So, if you can just give us color, whether we can sustain the kind of growth momentum we saw in fourth quarter?

So, the first quarter actually was pretty robust for us. We've had some the momentum that we saw in 2023 really has continued and the dynamic we see in our business isn't necessarily directly correlated to that discretionary spend trend because we can see some of our clients when they come under a bit more stress, they need our analytics to help them with their strategy to drive out of it. So the business actually has been pretty robust through quarter one. The business is a little bit more seasonal. And we see we tend to see more revenue into the back of the year, but we've we have seen a good quarter.

Rajiv, I think one of the questions you asked was, is there, if I understood it correctly, is there any spill over from '23 on to the first quarter of '24 driving growth? The answer is no. Nothing of that sort has happened. What we are also progressively trying to do is reduce the cyclicality in one part of the GBA business. And even as we go forward, we will see that cyclicality coming down.

Okay. And would it be possible to call out the service lines in GR and RS business, which have seen the impact of slowdown in discretionary spending?

No, I'm afraid not. Rajiv, we don't give, as I said, we don't give a sub-segmental or service line breakdown. But to answer your question, and I think Amish also pointed this out earlier, as had Jan in his slides when he was speaking, is that, look, looking at one quarter to see how a business is doing or to consider that that is reflective of the whole year will not be correct. We have seen muted performance in that business. But I think we should look at the full year's performance to be able to fully understand because then the business goes through all its cycles of revenue and expense. And that is what will bring out the true potential in that business. I think it should also suffice to say that, and again, Jan alluded to it when he was talking about in his slide, w hile we are seeing some level of headwind, we are also seeing opportunity. And those are the opportunities, the white spaces that we have, that we are going after.

And wouldn't it be safe to assume that our wallet share or competitive position remains intact in the GR and RS segment and that there was no role of we ceding market position in the revenue block, right?

No, our position, we still hold good. There have been certain external macro factors that have played a part. Our position holds good. In fact, our client stickiness continues the way it always has been.

And just last question on margins, if you can just call out the levers to protect margins, if we were to witness an extended period of spending slowdown, what will be the levers that you will use to drive and protect margins?

So a couple of things. One is, some of our businesses are I P businesses, where they have operating leverage. Some of our businesses are services businesses, where we look at what we are investing for new solutions, what we are investing on our capabilities. And there we then look for bench utilization, we look for productivity, we look for technology. So, there are multiple things that we will work on to try and keep working to improve margins, in addition to, of course, driving pricing and som e of the other things that we will work on. And in some cases, and if you look at our past trend, you will see that there are times when you have to invest ahead of time, right, you are building capabilities for the future. Even if you don't have business in a particular quarter, if you're going to continue to invest for a couple of quarters, you will continue to invest in capabilities. And that's where your margins might see a lower number. But the moment the revenues come in, the margins start correcting. So, I think the endeavor is to make sure that we are focused on our utilization, focused on our building our capabilities for the future, focused on leveraging technology. Okay, and I think these are areas where we would continue to invest while driving revenue growth and making sure that we are doing what is right from driving productivity and efficiency.

Yes, Thank you for answering all my questions and best of luck.

Thank you. The next question is from the line of Priyanka Goel from Trident Capital. Please go ahead. Priyanka, your line is unmuted. You can proceed with your question.

Hi, thank you so much for taking my call. This is Satya Trivedi filling in for Priyanka. My question is slightly higher level. There is a lot of discussion around the sovereign credit rating of India and the need of the hour is to upgrade that rating to something which is more reflective of the economic reality of the country today. Now, in that context, the fact it's one of the, so one of the ways it is being discussed that this gap can be addressed or this dependency on West-based credit agencies can be reduced is to give more prominence to the home-grown credit agencies. And if they, if the home-grown credit agencies they start doing sovereign ratings, then there is almost some level of fairness that can be brought into the system. From a competitive positioning perspective, the fact that you are owned by S&P Global, and do you see this, I'm curious to hear your views on the sovereign rating issue. I'm curious to hear your views on how you are positioned then vis-a-vis home-grown credit rating agencies who can actually start doing sovereign ratings while you cannot because you're obviously owned by S&P Global.

I don't think it's possible for us to comment on the sovereign ratings. I think we've been set up as a domestic rating agency. The idea was to fulfil the need in the domestic credit universe to provide benchmarking. So, 1988 we set up when there was practically way less differentiation on credit and everybody used to get the same interest rate. I think we've made a difference. And India is one of the most successful domestic credit rating, has one of the most vibrant domestic credit rating agencies in the world. So, I think that's where we are. At this juncture, it's very difficult to talk about where the demand would come from, because ultimately when you set up a business, it is you have to look at demand, supply, etc. I think the point of time, I think it's not, it won't be possible for us to comment on that question.

Okay. My view would be that it would be a competitive impediment if a couple of the home-grown ratings agencies start doing sovereign ratings. Then we will find ourselves at a slightly disadvantaged positions because then these home-grown agencies would sort of gain more credence, gain more prominence. Is that something, and I don't expect you to answer this question to me in the public forum, but I'm curious if this is something that is on your radar, if this is something that you discuss internally, domestically, if this is something that you would di scuss with your parents.

So, ma'am, I think as a rating agency, as an organization we look at everything which happens within the space, whether it happens here or outside, and we will continue to monitor. I think that is something that as an organization, we would look at the entire landscape.

Okay. Fine. Thank you very much.

Thank you.

Thank you. The last question is from the line of Abhijeet Sakhare from Kotak Securities. Please go ahead.

Hello. Good evening, everyone. Not sure if this was asked earlier. I'm sorry if it's getting repeated, but on the Research side, I just particularly wanted to know, has there been any impact of some of the large M&A deals that have happened in the sector in the past year and that leading to some vendor consolidation, and whether that's had, let's say, some sort of a one-off impact for us?

So, I think we did speak around the impact from a global slowdown from a discretionary spend of global financial institutions. And I think the volatility last year, given some of the transactions which happened from an M&A perspective in the global banking industry, plus what happened in the U.S. in the global banking industry. So, I think all put together, there has been an impact in the industry on discretionary spends, and that has had some impact on our financials for the quarter.

Got that. Amish, just to capture overall broader trends better, is it possible to give some sense, I mean, right now or maybe later in the future around some components of the research business around different scope of work or verticals or geographies, whichever way kind of you would want us to look at, that would be very helpful.

Okay, we'll take that feedback. Abhijeet.

Thank you so much. Have a good day.

Thank you.

Thank you. Thank you, sir. That concludes today's call. Thank you, everyone, for joining us. You may now disconnect.