ICRA Limited — Investor Presentation 2021

May 7, 2021

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ICRA Limited

May 7, 2021

BSE Limited Phiroze Jeejeebhoy Towers Dalal Street Mumbai 400 001, India Scrip Code: 532835

National Stock Exchange of India Limited Exchange Plaza, Plot no. C/1, G Block Bandra-Kurla Complex Bandra (East) Mumbai - 400 051, India Symbol: ICRA

Dear Sir/Madam,

Sub: - Investor Presentation, Q4 FY21

Pursuant to the applicable Regulations of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed Investor Presentation, Q4 FY21.

Kindly take the above on record.

Regards,

Sincerely,

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VIPUL AGARWAL Digitally signed by VIPUL AGARWAL DN: c=IN, st=Haryana, 2.5.4.20=de94b8f991806519364b35ac0550bc7d8e1067a3e4e0c0a063dc65973a37d556, postalCode=122001, street=A-52,TRINITY TOWER,DLF-V,GURGAON,HARYANA 122001, serialNumber=bfd9f35a76c35adc1c5ca169daebf0a2bdcfc79770aa695ac456dfc6e946bfea, o=Personal, cn=VIPUL AGARWAL Date: 2021.05.07 13:43:17 +05'30'
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(Vipul Agarwal) Group Chief Financial Officer

Encl.: As above

Building No. 8, 2[nd] Floor, Tower A DLF Cyber City, Phase II Gurugram – 122002, Haryana

Tel.: +91.124 .4545300 CIN : L749999DL1991PLC042749 R E S E A R C H

Website: www.icra.in Email: info@icraindia.com Helpdesk: +91 9354738909

Registered Office: B-710, Statesman House, 148, Barakhamba Road, New Delhi 110001.Tel. :+91.11.23357940-45 R A T I N G R E S E A R C H

I N F O R M A T IO N

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Group ICRA Investor Presentation Q4 FY21 May 6, 2021

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Contents

Group ICRA Overview

02

Financial

Performance Review – ICRA Limited (Standalone)

03

Financial

Performance Review – Group ICRA (Consolidated)

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• Research

• Webinars

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03

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• Group ICRA Financial Financial Research Overview Performance Performance - Webinars Review – Review – ICRA Limited Group ICRA (Standalone) (Consolidated)

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Group ICRA Overview

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ICRA Limited (parent entity – standalone)

ICRA Nepal-ICRA Lanka (subsidiaries of ICRA Limited)

ICRA Analytics (subsidiary of ICRA Limited)

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Provides independent credit ratings opinions and research ICRA Nepal Provides solutions, analytics and digital platforms for risk 30+ years of experience and First credit rating agency in Nepal management, market data, 400+ workforce consulting and knowledge services Provides independent credit rating 13 offices across India opinions and grading services 21+ years of experience and 600+ workforce ICRA Lanka Serving clients across the globe Provides independent credit rating opinions and research Certified as a “Great Place to Work”

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Group ICRA Overview

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03

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• Financial Financial Research Performance Performance - Webinars Review – Review – ICRA Limited Group ICRA (Standalone) (Consolidated)

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Economic Environment

GDP Growth

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(source: CSO)
6.6%^^
5.4% 5.4% 4.6%
3.3% 3.0%^^
0.4%
-7.3%
-24.4%
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Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21

Index of Industrial Production Growth

(source: MOSIP)

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3.7% 1.5% 3.0% 1.4%
-0.4% -1.4%
-4.3% -5.7%
-35.6%
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Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21

^^Implicit based on FY2018 3rd RE, FY2019 2nd RE, FY2020 1st RE, and the revised data for 9M FY2018, 9M FY2019 and 9M FY2020

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Bank Credit – YoY Growth*

(source: RBI)

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17.8%
13.0%
12.3%
11.1% 8.1% 8.5% 10.7%
7.0% 9.1% 8.8%
6.9% 6.4% 7.3% 6.2% 7.6% 6.7% 5.8% 5.9%
4.9%
2.7% 2.2%
1.6% 1.4% 1.4%
0.0%
-1.2% 0.4%
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Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Services Non-food Industry^

Outstanding CPs – YoY Growth*

(source: RBI)

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29.7%
5.8%
2.5%
-12.0%
-17.3% -16.8%
-22.3% -21.2%
-28.7%
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Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21

* YoY rise in total outstanding at the end of each quarter

^ Includes all types of enterprises, i.e. micro, small, medium and large 6

Challenges and Risk Factors

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02 Despite several policy measures, investment activity yet to show a meaningful revival

Economic and social challenges due to covid-19 pandemic

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Competition from other rating agencies

Ability to retain / attract quality manpower, rising compensation and related costs

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Reputation-related risks

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Funding substitutes including overseas borrowing or adverse domestic interest rate movements

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ICRA Standalone – Financial Performance

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35.3%
29.1%
52.8 48.5
Q4 FY20 Q4 FY21
24.8%
19.5%
207.8 181.3
FY20 FY21
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For the quarter ended March 31, 2021, the company’s operating income was Rs. 48.5 crore, as agains Rs. 52.8 crore in the corresponding quarter of the previous financial year, showing a degrowth of 8%. The preference for bank credit over bond issuances, as yields hardened, led to a growth in bank credit outstanding by 4.1% and a decline in bond issuances by 3.2%. This had a corresponding impact on the industry rated volumes in both the bank loan and bond rating segments – however, the growth in the bank loan rating segment was led by PSU entities. The impact of decline in bond market issuances was mitigated by the pick-up in securitization and bilateral assignment of pools towards the end of the Quarter

Other income declined by 20% during the quarter on y-o-y basis, primarily due to lower interest rate environment

The employees benefit expenses during the current quarter were higher by 35% on y-o-y basis, mainly due to reversal of variable pay provision (true-up) in corresponding quarter of the previous financial year and salary of senior management who came on board. Other expenses were lower by 52% on y-o-y basis mainly due to lower legal cost and lower travel cost & other overheads due to remote working whereas previous financial year had additional audit fees and higher CSR expenditure due to contribution to PM Cares

The PBT for the quarter was lower at Rs. 22.1 crores, lower by 23% as against Rs. 28.6 crores y-o-y basis and PAT was also lower by 23% at Rs. 16.3 crore on y-o-y basis

For the financial year ended on March 31, 2021, the Company’s operating income was at Rs. 181.3 crore, lower by 13% as against the previous financial year. The decline in the revenue has been mainly due to reduction in the securitisation volumes and contraction in the volume of debt rated in the large borrower segment. The company’s PBT was at Rs. 71.7 crore (22% y-o-y decline) and PAT at Rs. 52.9 crore (19% y-o-y decline)

~~1 1~~ Operating Revenue (₹ cr) Operating Margin 9M FY21

Operating margin = Operating Income less all expenses

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ICRA Standalone – P&L (₹ cr)

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P&L		Q4 FY20	Q4 FY20	Q4 FY21 vs Q4 FY20	FY20	FY21	FY21 vs FY20
Operating Revenue	a	52.8	48.5	-8.1%	207.8	181.3	-12.8%
Compensation Expenses	b1	19.5	26.5	35.5%	105.1	110.0	4.7%
Other Expenses	b2	12.8	6.1	-52.4%	44.2	28.9	-34.5%
Depreciation		1.3	1.4	2.3%	5.4	5.2	-2.4%
Finance Costs		0.4	0.4	-5.6%	1.7	1.7	4.1%
Total Expenses	b	34.2	34.4	0.6%	156.3	145.9	-6.6%
Operating Profit	c=a-b	18.6	14.1	-24.2%	51.5	35.3	-31.3%
Other Income	d	10.0	8.0	-20.4%	40.6	36.3	-10.5%
Profit Before Tax	e=c+d	28.6	22.1	-22.9%	92.1	71.7	-22.1%
Tax	f	7.5	5.8	-22.9%	27.1	18.7	-30.9%
PAT	g=e-f	21.1	16.3	-22.9%	65.0	52.9	-18.5%
Other Comprehensive Income (Net of Tax)	h	(0.1)	0.1		(0.5)	0.3
Total Comprehensive Income (Net of Tax)	i=g+h	20.9	16.3	-22.0%	64.4	53.2	-17.4%

Other Metrics		Q4 FY20	Q4 FY21	FY20	FY21
Comp Expense %	b1 / a	37.0%	54.6%	50.6%	60.7%
Other Expense %	b2 / a	24.3%	12.6%	21.3%	15.9%
Operating Margin %	c / a	35.3%	29.1%	24.8%	19.5%
Profit Before Tax Margin %	e / (a+d)	45.6%	39.1%	37.1%	32.9%
PAT Margin %	g / (a+d)	33.6%	28.8%	26.2%	24.3%

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ICRA Standalone – Investments (₹ cr)

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FY20 24 443 80 547
Total
FY21 158 438 19 615
Mutual Funds & Equities Fixed Deposits & Bank Balances Corporate Deposits
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01

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Group ICRA Financial Financial Overview Performance Performance Review – Review – ICRA Limited Group ICRA (Standalone) (Consolidated)

• Research

• Webinars

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ICRA Consolidated – Financial Performance

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33.8%
25.3%
87.1 82.1
Q4 FY20 Q4 FY21
26.0%
23.0%
321.1 301.1
FY20 FY21
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For the quarter ended March 31, 2021, the consolidated operating income was Rs. 82.1 crore, against Rs. 87.1 crore on y-o-y basis, reflecting a de-growth of 6%. Consolidated PBT was at Rs. 30.5 crore, lower by 27%, and PAT was at Rs. 22.5 crore, lower by 35% on y-o-y basis

Decline in revenue from ratings and consulting segments impacted the growth in consolidated revenue in Q4 FY21. The outsourcing and information services have shown a steady growth, driven by growth in both domestic and global businesses

For the financial year ended on March 31, 2021, the consolidated operating income was Rs. 301.1 crore as compared to Rs. 321.1 crore, reflecting a degrowth of 6%, on y-o-y basis. The other income was lower by 11%, over the previous financial year. The company’s consolidated PBT was lower by 15% at Rs. 112 crore and PAT was also lower by 15% at Rs. 82.7 crore as compared to the previous financial year

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- [ 2] 1 1 (0)
Operating Revenue (₹ cr) Operating Margin
9M FY21
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Operating margin = Operating Income less all expenses

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ICRA Consolidated – P&L (₹ cr)

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P&L		Q4 FY20	Q4 FY21	Q4 FY21 vs Q4 FY20	FY20	FY21	FY21 vs FY20
Operating Revenue	a	87.1	82.1	-5.7%	321.1	301.1	-6.2%
Compensation Expenses	b1	33.8	42.7	26.2%	161.7	171.7	6.2%
Other Expenses	b2	20.6	15.6	-24.6%	63.6	48.2	-24.1%
Depreciation		2.7	2.6	-3.9%	10.3	9.9	-3.6%
Finance Costs		0.5	0.5	-3.8%	2.0	2.1	0.6%
Total Expenses	b	57.7	61.3	6.4%	237.6	231.8	-2.4%
Operating Profit	c=a-b	29.4	20.8	-29.4%	83.5	69.2	-17.2%
Other Income	d	12.5	9.8	-21.9%	48.0	42.8	-10.7%
Profit Before Tax	e=c+d	41.9	30.5	-27.2%	131.5	112.0	-14.8%
Tax	f	7.0	8.0	13.7%	34.2	29.3	-14.4%
PAT	g=e-f	34.9	22.5	-35.4%	97.2	82.7	-15.0%
Other Comprehensive Income (Net of Tax)	h	(0.3)	0.1		(0.6)	0.0
Total Comprehensive Income (Net of Tax)	i=g+h	34.6	22.6	-34.7%	96.6	82.7	-14.4%
Other Metrics		Q4 FY20	Q4 FY21		FY20	FY21
Comp Expense %	b1 / a	38.9%	52.0%		50.4%	57.0%
Other Expense %	b2 / a	23.7%	19.0%		19.8%	16.0%
Operating Margin %	c / a	33.8%	25.3%		26.0%	23.0%
Profit Before Tax Margin %	e / (a+d)	42.1%	33.2%		35.6%	32.6%
PAT Margin %	g / (a+d)	35.0%	24.5%		26.3%	24.1%

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ICRA Consolidated – Investments (₹ cr)

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FY20 24 548 80 652
Total
FY21 158 569 19 746
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Mutual Funds & Equities Fixed Deposits & Bank Balances Corporate Deposits

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Group ICRA Financial Financial Overview Performance Performance Review – Review – ICRA Limited Group ICRA (Standalone) (Consolidated)

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• Research - Webinars

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High Impact Research

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Thematic Discussions for Industry Participants

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This Investor Presentation contains certain forward-looking statements (including expectations and plans) that may be identified by words, phrases, or expressions such as “expected”, “likely”, “will”, “would”, “continue”, “intend to”, “in future”, “opportunities” or their variations. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed under the sections titled “Business Outlook” and/or “Challenges/Risk Factors”, which are a part of this review presentation. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. The Company assumes no obligation to publicly update or otherwise revise statements circumstances after the date hereof or to reflect the occurrence of any reflecting arising underlying events, even if the underlying assumptions do not come to fruition.

The Company or any of its Subsidiaries shall have no liability whatsoever for any loss howsoever arising from any use of this Investor Presentation or its contents or otherwise arising in connection with this Investor Presentation.

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