Rating Methodology

CRNL undertakes a rating exercise based on information provided by the company, in-house databases and data from other sources that CRNL considers reliable. The primary focus of the rating exercise is to assess future cash generation capability of the company and its adequacy to meet debt obligations, even in adverse conditions. The analysis attempts to determine the long-term fundamentals and the probabilities of change in these fundamentals. The analytical framework of CRNL’s rating methodology is divided into two interdependent segments. The first deals with the operational characteristics and the second with the financial characteristics. Besides quantitative factors, qualitative aspects like assessment of management capabilities play a very important role in arriving at the rating for an instrument. The relative importance of qualitative and quantitative components of the analysis varies with the type of issuer. Rating determination is a matter of experienced and holistic judgment, based on the relevant quantitative and qualitative factors affecting the credit quality of the issuer.

CRNL’s IPO grading is a service aimed at facilitating the assessment of equity issues offered to public. CRNL’s IPO grading is an independent and professional opinion on the fundamentals of the issuer. The grade assigned to any individual issue (IPO, FPO, Rights Issue, Bonus Share) represents a relative assessment of the ‘fundamentals’ of that issuer. CRNL’s IPO grading would involve an in-depth assessment of the various quantitative and qualitative parameters of the issuer. Quantitative parameters include growth prospects of the industry, financial strength & operating performance of the issuer whereas, qualitative parameters primarily include management capability, promoters’ evaluation, accounting policies and corporate governance practices.

Download Methodologies