Strong Short-Term Performance Outshines Market
CRISIL’s recent price movement reflects a marked outperformance relative to the Sensex and its sector peers. Over the past week, the stock surged by 11.39%, vastly exceeding the Sensex’s modest 0.46% gain. This upward momentum continued into the new year, with the stock delivering a 7.78% return year-to-date, while the Sensex declined slightly by 0.18%. Such short-term strength indicates renewed investor interest and confidence in CRISIL’s near-term prospects.
On 06-Jan, the stock reached an intraday high of ₹4,700, representing a 5.81% increase from the previous close. This intraday peak underscores the bullish sentiment prevailing among market participants. Additionally, CRISIL outperformed its sector by 1.13% on the day, signalling relative strength within the ratings and analytics industry, which itself gained 3.73%.
Technical Indicators and Liquidity Support Uptrend
From a technical perspective, CRISIL’s price currently trades above its 5-day, 20-day, and 50-day moving averages, suggesting positive short- and medium-term momentum. However, it remains below the longer-term 100-day and 200-day averages, indicating that while the recent rally is encouraging, the stock has yet to fully overcome longer-term resistance levels.
Liquidity conditions remain favourable, with delivery volumes on 05-Jan rising marginally by 0.6% to 39,950 shares compared to the five-day average. The stock’s liquidity supports trade sizes of approximately ₹0.58 crore based on 2% of the five-day average traded value, facilitating smooth execution for institutional and retail investors alike.
Our latest monthly pick, this Small Cap from Oil Exploration/Refineries, is showing strong performance since announcement! See why our Investment Committee chose it after screening 50+ candidates.
- - Investment Committee approved
- - 50+ candidates screened
- - Strong post-announcement performance
Fundamental Strengths Bolster Investor Confidence
CRISIL’s management efficiency remains a key positive factor, with a return on equity (ROE) of 29.44%, reflecting strong profitability relative to shareholder equity. The company’s conservative capital structure, evidenced by an average debt-to-equity ratio of zero, further enhances its financial stability and reduces risk exposure.
Promoter holdings remain the majority stake, which often signals aligned interests between management and shareholders. This ownership structure can provide reassurance to investors regarding the company’s strategic direction and governance standards.
Long-Term Challenges Temper Enthusiasm
Despite the recent rally, CRISIL’s long-term growth trajectory presents some concerns. Over the past five years, net sales have grown at a modest annual rate of 13.49%, while operating profit expanded by 19.79%. These figures suggest steady but unspectacular growth, which may not fully justify the stock’s current valuation.
The company reported flat results in September 2025, indicating a pause in momentum that could weigh on investor sentiment. Moreover, the stock’s valuation metrics appear stretched, with a price-to-book value of 12.1 and a PEG ratio of 3.8. Such multiples imply that the market is pricing in significant future growth, which may be challenging to realise given recent performance.
Over the last year, CRISIL has underperformed the broader market substantially. While the BSE500 index generated returns of 7.74%, CRISIL’s stock declined by 23.26%. This divergence highlights the stock’s vulnerability to market rotations and investor caution regarding its growth prospects.
Is CRISIL your best bet? SwitchER suggests better alternatives across peers, market caps, and sectors. Discover stocks that could deliver more for your portfolio!
- - Better alternatives suggested
- - Cross-sector comparison
- - Portfolio optimization tool
Balancing Short-Term Gains with Long-Term Risks
In summary, CRISIL’s recent price rise on 06-Jan is primarily driven by strong short-term performance, sector outperformance, and positive technical signals. Investor participation has increased modestly, supported by the company’s robust management efficiency and low leverage. However, the stock’s expensive valuation and subdued long-term growth metrics suggest caution for investors seeking sustainable returns.
While the current rally may attract momentum traders and those optimistic about the ratings sector, fundamental investors should weigh the company’s flat recent results and historical underperformance against the broader market. The stock’s elevated multiples imply that expectations are high, and any disappointment in growth could lead to volatility.
Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →
