Buy Central Depository Services; target of Rs 425: HDFC Securities

HDFC Securities is bullish on Central Depository Services has recommended buy rating on the stock with a target price of Rs 425 in its research report dated March 20, 2018.

Broker Research

April 05, 2018 / 18:06 IST

26 Aug, 2025 12:21

Volume

Todays L/H

HDFC Securities' research report on Central Depository Services

Central Depository Services Ltd (CDSL) is one of two depositories in India and the only one to be listed. Given the high risk of data pilferage, we believe there is limited scope for any other depository to be set up. CDSL is a gem of a business that any investor constructive on India in the long term must own. It has a robust business model, with (1) One-third of revenues being annuity (issuer charges), (2) Embedded non-linearity playing out (1,502 bps margin expansion over FY13-17), (3) Low capex requirement (~3% of revenue), (4) Excellent cash generation (OCF ~63% of EBITDA) and (5) Huge option value from new areas like digitisation of academic records and insurance policies, e-warehouse receipts and GST Suvidha centres.

Outlook

We assign a P/E multiple of 33x to core earnings and add net cash to arrive at a TP of Rs 425 (47% upside from CMP). At 24/21x FY19/20E earnings, value is imminent and merits a BUY.For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.