I place a hold rating on $SPGI for my school's investment fund that had initially bought SPGI in 2017. SPGI is the world's biggest rating agency with a wide moat and considerable downside protection.

1. Aashish Chaturvedi | aashishchaturvedi@chicagobooth.edu
The University of Chicago Booth School of Business
S&P is the world's biggest ratings agency, tracing back to the analysis of railroad bonds prior to the Civil War
Prior Thesis:
Higher Licensing Fees from Index Division in-line with industry averages √
Unjustified fear of debt overhang; EM, ABS will continue to drive rating growth X
Refocus on core business will lead to margin expansion and growth in recurring business √
Current Thesis:
• As the economy has continued to expand, and despite a hawkish Fed (‘17-18), companies’ bond portfolios too
have expanded. While the EM growth in ratings is still not shown up for SPGI, the local market remains untapped
and SPGI could take advantage as the first-mover in this space. Only 25 of the Chinese private market bonds are
held by foreign investors. Typical bond is 3-year duration compared to 7-11 years in the US, therefore there
remains a huge runway for growth here and of repeat business.
• SPGI’s margins have continued to increase despite revenue headwinds in its core business. Given management
has delivered margin expansion at levels significantly above industry averages, signals a strong operating
leverage potential. This is especially possible due to SPGI’s subscription businesses (Indices and Platts) but also
due to global central banking ‘put’, trickling down to corporate issuances and rising AUM levels the world over.
Core Ratings Business:
• The core business that SPGI is focused on remains
the ratings business, from where it derives 44
percent of its overall revenue. New initiatives like
ESG will continue to drive this business’ growth
• The ratings business derives revenues from both
corporate and government debt issuance. While
this portion of SPGI’s business is fairly dominated
by market conditions, SPGI enjoys more stability
to its revenues from issuance, thanks to the high
quality moat of its business offerings and recurring long term relationships
Key Risks:
• Worsening of credit conditions, via leveraged loans or Central Banks lifting their respective puts, changing
market conditions, drying up debt issuances, potential AUM drawdowns in the non-debt markets.
• Excessive reliance on China for ratings business incremental growth or ESG as next frontier of offerings. While
SPGI is first mover in ESG-ratings and China, the market sizes may not shift the needle too much.
• Recent acquisition of Kensho, for $550m (largest AI deal so far) does not pan out / monetization is delayed
S&P Global, Inc. (NYSE:SPGI) | Current Price $217 (5/6/2019) | Recommendation: HOLD; 1Y Target Price: $241 (10.4%)

2. Aashish Chaturvedi | aashishchaturvedi@chicagobooth.edu
The University of Chicago Booth School of Business
Valuation:
• SOTP valuation was performed to attribute different multiples to different business groupings (Ratings 27x;
Market Intell. 25x; Platts 20x; Indices 20x), in line with their respective comparables and stage of business
within the company. Using a weighted average multiple of
25.6x implies 1 year target share price of $241, giving a 10.4%
upside. And a 5-year target share price of $287, giving a 31.6%
upside.
• SPGI is trading at fair value, especially when compared to its
historical range, however when compared to the market and its
peers, SPGI remains undervalued and a decent way to enjoy
upside in the financial technology space.
• Premium to Self:
o SPGI trades at a premium to its historic valuations across all valuation multiples, but not vs. the market.
• Discount to Peers:
o SPGI trades at a discount to its peers and industry
averages across most valuation multiples.
• Base Model:
Current vs 5Yr Average Historical Multiple Implied @ Hist Avg
Metric Current(x) Hist Avg(x) Diff(%) # SD Price(USD)
BF P/E 23.43 21.06 11.24 1.50 197.43
BF EV/EBITD 17.30 13.26 30.50 2.20 163.99
BF EV/EBIT 18.00 13.87 29.79 2.20 164.98
BF EV/Rev 8.77 6.03 45.56 2.00 145.12
LF P/BV 139.35 58.53 138.08 2.60 92.24
Pro Forma Income Statement 2014A 2015A 2016A 2017A 2018A 2019E 5/7/2020 2020E 2021E 2022E 2023E
Total Revenue 5,051 5,313 5,661 6,063 6,258 6,534 6,743 6,952 7,409 7,612 7,990
Growth YoY 5.2% 6.5% 7.1% 3.2% 4.4% 3.2% 6.4% 6.6% 2.7% 5.0%
Operating Profit 1,808 2,053 2,289 2,751 2,961 2,851 2,990 3,128 3,334 3,425 3,596
Operating Margin 35.8% 38.6% 40.4% 45.4% 47.3% 43.6% 44.3% 45.0% 45.0% 45.0% 45.0%
EBITDA 1,942 2,210 2,470 2,931 3,167 3,294 3,416 3,539 3,757 3,985 4,215
EBITDA Margin 38.4% 41.6% 43.6% 48.3% 50.6% 50.4% 50.7% 50.9% 50.7% 52.4% 52.8%
Interest, Tax, Other (2,057) (1,054) (364) (1,435) (1,209) (1,077) (1,104) (1,131) (1,110) (1,278) (1,345)
Net Income (115) 1,156 2,106 1,496 1,958 2,217 2,313 2,408 2,647 2,707 2,870
Net Income Margin 24.7% 31.3% 33.9% 34.3% 34.6% 35.7% 35.6% 35.9%
Growth YoY 82.2% -29.0% 30.9% 13.2% 4.3% 8.6% 9.9% 2.3% 6.0%
Diluted EPS 4.21 7.94 6.23 8.19 9.05 9.39 9.73 10.74 10.64 11.19
Growth YoY 88.6% -21.6% 31.5% 10.5% 3.8% 7.5% 10.3% -0.9% 5.2%
Weighted PE Multiple 25.6x 25.6x 25.6x 25.6x 25.6x 25.6x
SOTP Implied Share Price (Base Case) 217.88$ 231.83$ 240.58$ 249.32$ 275.11$ 272.55$ 286.76$
Implied Return (Base Case) 6.4% 10.4% 14.4% 26.3% 25.1% 31.6%
Ticker P/E
EV/
EBITDA
EV/Rev
Mean Comps 33.86 22.15 7.93
U.S Fin Tech
Index
36.80
SPGI US 23.43 17.30 8.77
MSCI US 35.05 24.57 13.48
INFO US 21.14 15.40 6.16
VRSK US 31.31 20.82 9.96
FICO US 35.84 24.29 7.48
FDS US 27.79 21.52 7.52
TRU US 24.44 15.42 6.13
TRI CN 45.09 19.96 5.24
EXPN LN 25.78 16.60 5.72
MKTX US 54.49 37.83 21.03
IRE AU 27.94 18.57 5.29
Discount to Comps
P/E EV/EBITDA EV/EBIT EV/Rev
-30.8% -21.9% -27.4% 10.6%
S&P Global, Inc. (NYSE:SPGI) | Current Price $217 (5/6/2019) | Recommendation: HOLD; 1Y Target Price: $241 (10.4%)