Dipping into Depository- CDSL

 

CDSL was initially promoted by BSE Ltd. which has thereafter divested its stake to leading banks as “Sponsors” of CDSL. There are currently two share depositories in India . NSDL (National Securities Depository Ltd) and CDSL (Central Depository Services India Ltd).

NSDL was promoted by some renowned banks and financial institutions including IDBI Bank, UTI, NSE and some other institutions, while the CDSL was also promoted by some solid institutions including the likes of Bombay Stock Exchange, Bank of Baroda, Bank of India, HDFC Bank

The initial public offering (IPO) of Central Depository Services (India) Ltd (CDSL) received overwhelming response and got listed in June 2017.

Plus Points

• Currently there are only 2 DPs and there is a huge entry barrier for new players.

• The number of demat shareholders are expected to increase as many people / fund houses are entering the stock market.

• Expenses are expected to be almost the same and the upside revenue to grow y-o-y.

• They are also getting into academic demat & discussion are on about unlisted indian companies being dematerialized.

Minus Points

• SEBI plays a major role in framing policies and CDSL is expected to adhere to them including the tariffs .The charges are fixed by SEBI and CDSL has limited options to show exceptional increase in revenue.

• SEBI is considering allowing corporates to enter the depository business based on the recommendations of the panel under RBI Deputy Governor R Gandhi.

• In the near term though there are less threats to the business model but in the medium term one has be to wary of emerging technology trends. Eg. Digilocker was preferred for Academic Records…its a government initiative and free for the customer. Also, there is threat from fintech companies as they can perform better with technologies like block chain etc.

Recent Developments

CDSL Ventures gets UIDAI nod to undertake e-KYC Aadhaar authentication. 

Read more at:

http://timesofindia.indiatimes.com/articleshow/77243457.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

The Central Depository Services (India) Ltd (CDSL) on Monday announced that the net active Demat accounts have crossed a new milestone of 2 crore. CDSL is currently the largest depository in the country.

Read more at:

https://www.thehindubusinessline.com/markets/cdsl-active-demat-account-hits-2-cr/article30666639.ece

Chartered Accountants

Jayesh Gandhi who has signed the Audit Report and Balance Sheet and Statement of Profit and Loss of the company for FY 2019-20 on behalf of S.R. Batliboi & Co. LLP, Chartered Accountants (Firm’s Registration No. 301003E/E300005).

Technicals

The script of the company trading around Rs 425/share as on 29th August 2020. On the technical chart it has support around Rs 400 level and more stronger support at Rs 360-375 level and on the higher side it can top around Rs 485 plus. 

Recommendation

Pick CDSL of small quantities on SIP Basis when opportunity comes at a lower level in tandem with market downfall.

An Optimistic Target price may be four digits in coming times. In a sentence it is a stock for your next generation. .

Conclusion

I am not an investment advisor as per SEBI guidelines. The opinions are personal. The above discussions are only meant for educating readers. The intention is to share knowledge to enrich potential investors and also get enriched by their feedback. My views are not biased.