Hold Central Depository Services: target of Rs 1500 : ICICI Securities

ICICI Securities's research report on Central Depository Services

Depositories remain a structural play on India’s capital markets, buoyed by higher retail participation and distinguished by a mix of annuity and transaction-based business. Central Depository Services (CDSL) benefits from: 1) its leadership (in a duopoly industry) in terms of number of demat accounts (market share at 80%, as of Sep’25 [calculated as per data on website]); 2) its steady non-market-linked revenue (from annuity issuer charges plus others like corporate actions); 3) possible operating leverage; and 4) traction from market-linked revenue segments like cash delivery, company listings and KYC. CDSL’s quarterly EBITDA had declined from INR 1.9bn in Q2FY25 to INR 1.3bn in Q1FY26, but with a pickup in capital market activities, it increased to INR 1.78bn in Q2FY26. Driven by this uptick in capital market activities and ~54% of revenue being market linked, we upgrade CDSL to HOLD.

Outlook

Upgrade to HOLD; TP revised to INR 1,500 (earlier INR 1,181) based on 40x FY28E core EPS of INR 34.4