Equity Analysis

• The company is a leading global analytics company with strong customers base of more than 1 lakh. Seventeen of the top 20 global investment banks and 4 of the top 10 asset managers are customers. The company has direct presence in 9 countries.
• The company has exhibited mixed performance in CY2019 with continued investments in technology and innovation given the increasing demand for niche tools and products globally.
• The relentless focus on delivering value by leveraging analytical rigour and quality, and making a difference to the customer helped in navigating the myriad headwinds.
• The company has invested in building platforms to leverage rich proprietary data, deep research capabilities and experience in analytics. It would continue investment in new growth areas in risk and analytics.
• The Ratings business logged healthy growth despite a slowing economy, while on the global front Coalition did well even as regulatory changes and tempering demand for traditional risk offerings in the US affected Risk and Analytics business.
• The domestic economic scenario continues to be muted, with GDP growth moderating to 11 year low, investment appetite weak and continued stress in the financial sector.
• The credit growth slipped to single digit, while wholesale credit growth fell below 4% towards the end of the year. Corporate bond issuances grew 14%, driven primarily by frequent issuers - the number of issuers declined by 30% to 371. Bank loan ratings market fell a sharp 28%.

• Revenues of ratings business were up in 2019 on the back of ratings quality, addition of large corporate clients, increase in securitisation mandates, and new offerings such as Independent Credit Evaluation (ICE).
• The rated entities shows the lowest one-year default rates across credit rating agencies (CRAs), while the stability rates across CRAs too are the highest at each investment grade rating category.
• The company has enhanced market leadership and share as investors shifted focus on quality of ratings and analytical rigour. The share in the bond market grew to 70%.
• The business continued to innovate and rated India's first wholesale real estate sector receivables securitisation transaction and the first partial credit enhanced (PCE) bond transaction in accordance with the Reserve Bank of India's (RBI) PCE guidelines.
• The Global Analytical Center (GAC) increased coverage for S&P Global Ratings in the areas of new analytics such as ESG, and sharpened focus on automation and optimisation by leveraging new technologies to streamline operations in data and analytics.
• The challenges for the business include slower GDP growth, weak credit growth and subdued investment cycle which would slowly pick up.

• The research business was impacted due to slower GDP growth and sluggish private capex leading to lower discretionary spend on research. Globally, corporate and investment banking revenue pool is estimated to have declined 3% in 2019 owing to weakness in the equities and banking space and margin pressures persisted. Trade wars and geopolitical developments continued to affect business environment. The global risk industry also saw the impact of maturing regulations.
• The Research segment performance in the quarter and the full year was led by Coalition, which saw robust traction in client and competitor analytics.
• Coalition continued its initiatives aimed at enhancing market relevance and broadening its reach to include more regional players.
• The India Research business saw growth in funds and fixed-income research by leveraging its proprietary data and analytics platform Quantix for asset and wealth managers, and institutional investors. But the segment's performance was affected by changing demand in the risk and analytics space, with the global financial services sector preparing itself for the next wave of regulations.
• The company continued to invest in augmenting talent pool and in new technologies to meet changing demand of clients.
• During the quarter, the company has executed definitive agreements to acquire Greenwich Associates LLC and the transaction is expected to be completed over the next couple of months subject to customary closing conditions and approvals.
• The company would focus on improving margins in the research business going forward.

• The advisory business witnessed tough year amid low discretionary spends.
• The segment grew on the back of new wins in the credit risk, regulatory reporting and business analytics space in addition to new mandates from government and multilaterals in the infrastructure space.
• Among the key opportunities, the company sees Government's resolve to spend Rs 100 lakh crore on infrastructure over next 5 years to drive development programs.
• The business generated significant share of revenues from markets outside India.

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