CDSL shares open 1.5% higher on the back of strong earnings

The company reported a 28 percent year on year jump in its consolidated net profit to Rs 74 crore in June quarter to Rs 58 crore a year ago. Revenue advanced 19 percent to Rs 174 crore.

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26 Aug, 2025 12:21

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Shares of Central Depository Services India Ltd (CDSL) opened 1.5 percent higher after the company reported strong earnings.

At 9.30am, the stock was trading at Rs 1,233 on the NSE, up 1.4 percent from its previous close, while the Nifty gained 0.31 percent to 19,577.35 points.

The company reported a 28 percent year-on-year jump in its consolidated net profit to Rs 74 crore in the June quarter from Rs 58 crore a year ago. Its revenue advanced 19 percent to Rs 174 crore.

The growth observed in FY23 was influenced by a 17 percent reduction in market-linked revenue such as encompassing transaction, IPO and KYC fetching, which was counterbalanced by a substantial 30 percent on-year expansion in the annuity stream (comprising annual issuer charges, e-voting, and e-CAS).

The substantial growth fuelled by a quadrupling rise in transaction revenue per demat account showed a leveling off in FY23. CDSL continues to be a market leader in the number of beneficial owner (BO) accounts, with a 73 percent market share and 85 percent incremental share.

CDSL is adding 2 million accounts monthly, which is up 46 percent on-year but down 36 percent from the peak. Analysts expect that the revenue per demat account is poised to increase as the new investors who were brought onboard in the past two years mature and begin actively transacting/participating in the market.

Analysts expect the company growth to recover in fiscal year 2024, led by a rebound in beneficial owner (BO) account additions, increased transaction revenue stemming from a rise in delivery volume, and the ongoing expansion of the annuity revenue stream.

Recent reports indicate that the IRDAI is reviewing a proposal to make the dematerialisation of insurance policies obligatory. The potential for expansion in the insurance sector presents an advantageous possibility (due to regulatory initiatives), which could contribute approximately 7 percent to the revenue, based on an assumed 25 percent market share for CDSL.

Currently, only 2 percent of the policies are in demat form, and as per analyst estimate, the total recurring opportunity for repositories will be Rs 152 crore. CDSL can generate additional revenue of Rs 38 crore, assuming a 25 percent market share, which is 7 percent of the FY23 revenue, analysts said.

Around 52 percent of CDSL revenue originates from market-related avenues (comprising transactions, IPOs/corporate actions, and KYC services). However, market-related revenue suffered a decline of about 17 percent in FY23, primarily attributed to a fall of around 20 percent in transaction revenue and around 17 percent in IPO revenue.

Transaction revenue tends to follow a cyclical pattern, closely aligned with the growth trajectory of delivery trades. Encouragingly, after experiencing five consecutive quarters of sequential decline, delivery volume rebounded with a noteworthy 12 percent on-year rise in Q1FY24. The anticipated recovery in KYC revenue further contributed to the positive outlook.

"We increase our EPS estimate by 5/7 percent for FY24/25, implying revenue/EBITDA/APAT CAGR of 18/21/20 percent over FY23-26," said HDFC securities. "We expect the market-linked revenue to register a CAGR of 17 percent over FY23-26, driven by a 17/15/18 percent CAGR in transaction/IPO/KYC revenue."