Central Depository (India) Services (CDSL), promoted by BSE Ltd, is one of the two securities depositories operating in India with 60% incremental market share and 44% market share as of FY17. CDSL offers an efficient and instantaneous transfer of securities with the objective of providing convenient, dependable and secure depository services to all market participants at affordable cost. Presently, CDSL's services are delivered by 589 Depository Participants to over 12.4 mn Investor accounts from over 17000 service centres across the country. It also holds over 15 mn KYC records with a market share of ~67%. CDSL has registered revenue and PAT CAGR of 10% and 21% respectively during FY14-17.
- Repeat business along with multiple offerings provide revenue visibility
- India's leading securities depository with highest incremental growth of BO accounts
- High economies of scale with consistent dividend payout
- Convenient and dependable depository services
Outlook & Valuation
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CDSL which holds 60% of incremental market share of BO account is likely to benefit from rising per capita income, growing Indian financial market and gamut of value added services. CDSL generates 39% of revenue (as against 7% for NSDL) from annual fees, provides strong revenue visibility. Other services like commodity repository (to be launched shortly), KYC services, e-notice, e-insurance account, NAD project, e-will, etc should aid topline and bottomline going forward. At the upper end of the price band, the stock is available at P/E of 18.0x based on FY17 earnings, which is reasonable considering strong parentage, debt free balance sheet, high operating (~59%) & net profit margin (~53%) and decent RoE (~16%). Further, CDSL’s cash and investments accounts for ~35% of market cap, provides adequate margin of safety. We recommend SUBSCRIBE to the issue with long term perspective.
SPA Securities was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate finance , risk management and insurance broking.
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