CRISIL Q2 FY27 Profit Growth Stalls as Costs Bite Into Record Revenue
The analytics leader posted a 20% revenue jump in Q2 FY27, but profit growth slowed sharply as higher costs and lower other income squeezed margins.
CRISIL's Q2 FY27 saw revenue surge 20% year-on-year, yet profit growth lagged at under 6%. The quarter reveals a margin squeeze, with net profit margin down 250 basis points from a year ago.
For CRISIL, a quarter of strong top-line expansion has run into the hard reality of rising costs. The analytics and ratings leader posted a 20.2% year-on-year revenue jump to ₹1,095 crore in Q2 FY27, continuing a multi-quarter growth streak. Yet, profit after tax grew just 5.9% to ₹205 crore, revealing a significant squeeze on profitability as expenses climbed faster than sales.
The numbers tell a story of diverging momentum. Sequentially, revenue inched up 1.8%, but profit fell 5.5%. The net profit margin settled at 18.7%, down 140 basis points from the previous quarter and a full 250 points lower than the same period last year. This marks the third consecutive quarter of declining quarterly profit.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 1,095.16YoY +20% | 1,075.39 | 911.24 |
| Profit (₹ Cr) | 204.54YoY +5.9% | 216.46 | 193.10 |
| Net Profit Margin (%) | 18.7YoY -12% | 20.1 | 21.2 |
Where the growth came from
According to an Alpha Inflection analysis, the revenue surge was driven by both core segments. The Research, Analytics & Solutions division, which contributes about 72% of revenue, grew 30.1% year-on-year. The high-margin Ratings business also expanded by 21.4%, with its segment profit margin rising 330 basis points, showing strong pricing power.
The costs that ate the profit
Despite this segment strength, consolidated profitability weakened. Reports point to a combination of higher depreciation charges and a sharp drop in other income—which fell to around ₹21 crore from ₹36 crore in the prior quarter, as noted by Alpha Inflection. Employee costs, while showing some operating leverage, were joined by rising professional and service fees. The result was a margin contraction that prevented profit from keeping pace with the top line.
A watch on working capital
Another subtle pressure point emerged in working capital. Trade receivables reportedly grew 44% in the first half of the fiscal year, outpacing revenue growth. While operating cash flow for H1 remained robust at ₹314 crore, this faster buildup of receivables warrants monitoring for its impact on cash conversion in the coming quarters.
Management did not provide formal forward guidance, but the focus remains on leveraging domain-led GenAI capabilities, as mentioned in an Equitybulls report. The competitive environment is intensifying, with peers like ICRA also posting strong growth, but CRISIL's valuation commands a significant premium, trading at a P/E of 41.3 against an industry average of 33.9.
Key Points
- Revenue growth remained strong at 20.2% YoY, led by a 30% surge in the Research, Analytics & Solutions segment.
- Profit growth slowed sharply to 5.9% YoY, with net profit margin contracting 250 basis points due to higher costs and lower other income.
- Sequential profit declined 5.5% despite a small revenue increase, marking a trend of declining quarterly profits.
- Operating cash flow generation stayed healthy, though receivables growth accelerated, requiring attention.
Hexa Perspective
The quarter underscores a transition phase for CRISIL. The engine of growth—demand for analytics and ratings—is clearly running, but the cost structure is adjusting. Some pressure, like lower other income, may be transient, but investments in technology and competitive hiring could keep margins in check near-term. The key for the next few quarters is whether the high-margin Ratings business can continue its expansion to offset investments in the larger, faster-growing Research segment. If revenue growth sustains its pace, operating leverage could eventually reassert itself. For now, the premium valuation reflects market confidence in the long-term analytics story, but it also demands a return to profit momentum that this quarter did not deliver.
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