Hold Central Depository Services target of Rs 2169: East India Securities

East India Securities recommended hold rating on Central Depository Services with a target price of Rs 2169 in its research report dated May 07, 2024.

Broker Research

May 08, 2024 / 12:42 IST

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East India Securitie's report on Central Depository Services

Annual issuer charges increased by 38.3% yoy/ 1.6% qoq at Rs 650 mn. Transaction charges increased by 130.3% yoy/ 28.8% qoq at Rs 760 mn. IPO/ Corporate action charges increased by 285.7% yoy but declined by 12.9% qoq at Rs 270 mn. Online data charges increased by 136.4% yoy/ 20.9% qoq at Rs 520 mn. While the overall market size for demat accounts increased by ~32% yoy/ ~9% qoq, number of demat accounts with CDSL at 115.6 mn were higher by ~39% yoy/ ~10% qoq. Market share in demat accounts improved to ~76% (Vs ~73% yoy/ ~75% qoq). In demat custody value, while the overall market size increased by ~43% yoy/ ~7% qoq, demat custody value with CDSL at Rs 64.2 trillion was higher by ~62% yoy/ ~11% qoq. Market share in demat custody value increased by 155 bps yoy/ 49 bps qoq to ~13%.

Outlook

CDSL is currently trading at P/E of 39.6x on FY26 basis. We value the stock based on P/E methodology and assign multiple of 40x (2year forward) on FY26E PAT of Rs 5,667 mn to arrive at a target price of Rs 2,169 per share, which is potential upside of ~1.0% from current market price and recommend “HOLD” on the stock.

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