ICRA's Board approves buyback of its equity shares from open market through stock exchange

The Board of Directors of ICRA Ltd., at its meeting held on Thursday, gave its consent to the unaudited financial results of the company for the third quarter and nine months, ended December 31, 2016 and also approved buyback of its equity shares from open market through stock exchange.

For the quarter ended December 31, 2016, the Company's operating income was Rs. 53.33 Crore, as against Rs. 50.10 Crore in the corresponding quarter of the previous financial year, reflecting a growth of 6.4 percent, due to growth in debt-market-related ratings.

The other income in the current quarter is higher than the corresponding quarter, mainly due to dividend from subsidiary and higher interest income. PBT for the quarter was at Rs. 30.44 Crore, reflecting a growth of 28 percent, against the corresponding quarter of the previous financial year. PAT for the quarter was at Rs. 21.18 Crore, higher by 36 percent against the corresponding quarter.

In the current quarter, there were certain additional expenses aggregating to Rs. 5.56 Crore, on account of special bonus, additional deferred incentives effective from April 1, 2016, and change in compensated absences policy.

For the nine months, ended December 31, 2016, the Company's operating income was Rs. 152.82 Crore, as against Rs. 141.99 Crore in the corresponding period of the previous financial year, reflecting a growth of 7.6 percent. PBT for nine months was Rs. 88.49 Crore, reflecting a growth of 28 percent over corresponding period of the previous financial year, mainly due to higher non operating income, including profit on sale of IT business.

The Board of Directors of the Company at its meeting held on August 5, 2016 and the Members of the Company through Postal Ballot, on September 17, 2016, approved sale of the entire shareholding held by the Company in ICRA Techno Analytics Limited (ICTEAS) (now known as Nihilent Analytics Limited) to Nihilent Technologies Limited, for a consideration of Rs. 68.75 Crores, comprising payment of cash consideration of Rs. 32.00 Crore; and 10 percent interest bearing and unlisted non-convertible debentures, issued for the balance amount, to be redeemed after one year and fifteen days from the date of allotment, that is, October 7, 2016. The transaction got consummated on October 7, 2016, and as a result, ICTEAS along with its subsidiaries ceased to be subsidiary of the Company.

For the quarter ended December 31, 2016, consolidated operating income was Rs. 75.47 Crore, as against Rs. 87.54 Crore in the corresponding quarter of the previous financial year. The sale of IT business during the current quarter, resulted into a decline in the operating income, as the revenues from this segment were recognised till October 7, 2016, being the transaction date.

Consolidated PBT in the current quarter was at Rs. 21.77 Crore, as against Rs. 30.59 Crore in the corresponding quarter, mainly due to sale of IT business and certain onetime additional expenses.

In the current quarter, there were additional expenses aggregating to Rs. 8.43 Crore, on account of special bonus, additional deferred incentives effective from April 1, 2016, change in compensated absences policy, fixed assets impairment and additional provisioning due to termination of a specific contract.

For the nine months ended December 31, 2016, consolidated operating income was Rs. 254.25 Crore, as against Rs. 249.14 Crore in the corresponding quarter of the previous financial year, reflecting a nominal growth due to partial recognition of IT business revenues till the date of transaction. Other business segments have shown a growth of nine percent on year-on-year basis.

The Board of Directors of the Company in its meeting has approved the buyback of its equity shares from open market through stock exchange, at a maximum price of Rs. 4,500 per equity share, for an amount not exceeding Rs. 40 Crore.

The buyback will help the Company effectively utilise its available surplus funds, which is in excess of the surplus amount needed to be retained by the Company for the future growth of the Company as envisaged by the Board. The buyback will enhance overall long term shareholders' value for continuing shareholders, without compromising on the future growth opportunities of the Company, as well as provide an exit opportunity to the public shareholders. This may lead to reduction in outstanding equity shares of the Company, improvement in 'earnings per share' and enhanced return on equity, assuming that the Company would earn similar profits as in the past.