CDSL’s stock has been under significant pressure, as the share price has not shown any meaningful upward movement over the last two years. The company reached a high of ₹1,410 in August two years ago, while the stock is currently trading around ₹1,385. Despite the passage of two years, the stock has not delivered any significant price appreciation.
Earlier, the stock traded at a higher valuation due to expectations of increased participation across the capital market. However, those expectations have not fully materialized, and the valuation has not been justified.
Revenue Growth vs. Rising Expenses
One of the key reasons behind the lack of strong stock performance is the company’s financial trend over the last two years.
CDSL’s consolidated revenue increased from ₹812 crore in FY24 to ₹1,147 in FY26 crore, representing nearly 42% growth. While this reflects healthy revenue growth, the company’s expenses have risen at a much faster pace.
Expenses have increased by nearly 74% during the same period. One of the biggest contributors has been technology costs. Over the last two quarters, technology expenses have exceeded employee costs, making technology the company’s largest operating expense. As a result, expenses are growing faster than revenue.
This has directly impacted profitability. The company’s margin, which stood at around 60% in FY24, has declined to approximately 51% in FY26. This 9% decline has placed additional pressure on the stock, making it more difficult for the share price to move higher.
Management’s View on Technology Costs
Management was also questioned about the sharp increase in technology expenses, which have risen nearly four times compared to FY23.
In response, MD and CEO Nihal Vora stated that the increase is part of a strategic shift. However, technology costs have now reached nearly ₹240 crore, accounting for around 14% of the company’s total revenue. This continues to put significant pressure on the company’s margins.
Revenue Mix Remains Stable
The company’s largest source of revenue is annual issuer income, contributing nearly 43% of total revenue. Transaction charges account for around 22%, while other revenue comes from online data charges and other income. IPO and corporate action income contributes approximately 6.3% of total revenue.
| Income Source | Q4FY25 (256) | Q1FY26 (295) | Q2FY26 (341) | Q3FY26 (334) | Q4FY26 (268) |
| Annual Issuer Income | 34.0% | 38.6% | 33.7% | 33.8% | 42.5% |
| Transaction Charges | 19.1% | 21.0% | 17.3% | 18.0% | 22.0% |
| IPO / CA Income | 9.8% | 7.1% | 18.2% | 17.7% | 6.3% |
| Online Data Charge | 16.4% | 12.2% | 13.5% | 14.7% | 18.3% |
| Other Income | 20.7% | 21.0% | 17.3% | 15.9% | 10.8% |
Annual issuer income currently accounts for nearly 42% of revenue, compared with around 34% earlier. However, the increase in its contribution is largely because other revenue segments have weakened.
For example, IPO and corporate action income contributed nearly 9.8% in Q4 FY25 but has now declined to around 6.3%. This change reflects lower revenue contribution from these segments.
Analysts also asked management when the pricing of annual issuer income would be revised. In response, MD and CEO Nihal Vora stated that the matter is subject to SEBI’s approval and that the company will communicate any changes when they occur. However, no timeline was provided.
Overall, while the company’s revenue sources continue to show steady growth, rising expenses remain the primary factor putting pressure on margins.
Q1 FY27 Expectations
Looking ahead to Q1 FY27, the geopolitical situation has not resulted in significant market volatility.
Brokerage companies such as Angel One, Groww, and others have not witnessed substantial growth in brokerage revenue, although their MTF books have shown strong growth. However, MTF growth is not considered a suitable indicator for analyzing CDSL, as it does not directly contribute to the company’s revenue.
Therefore, annual issuer income is expected to remain stable.
Similarly, IPO and corporate action income is also expected to remain stable, as there were not many IPOs or corporate actions during Q1 FY27. Other revenue segments are also expected to remain largely stable despite continued trading activity.
Based on these factors, analysts do not expect any major surprise in CDSL’s revenue for Q1 FY27.
FAQ 1. Why has the CDSL share price remained under pressure?
The CDSL share price has remained under pressure because it has not shown any significant upward movement over the last two years. Although the company has reported revenue growth, rising expenses and declining margins have limited the stock’s performance.
FAQ 2. How much has CDSL’s revenue grown in the last two years?
CDSL’s consolidated revenue increased from ₹812 crore in FY24 to ₹1,147 crore, representing nearly 42% growth over the last two years.
FAQ 3. Why are CDSL’s margins declining?
CDSL’s margins have declined because its expenses have increased faster than its revenue. While revenue grew by nearly 42%, expenses increased by around 74%, resulting in the company’s margin falling from about 60% in FY24 to 51% in FY26.
FAQ 4. Why has CDSL’s technology cost increased?
According to the company’s management, the increase in technology cost is part of a strategic shift. Technology expenses have increased nearly four times compared to FY23 and now account for around ₹240 crore, or approximately 14% of the company’s total revenue.
FAQ 5. What are the expectations for CDSL’s Q1 FY27 revenue?
Based on current market conditions, analysts expect CDSL’s annual issuer income, IPO and corporate action income, and other revenue segments to remain stable. Therefore, no major surprise in revenue is expected for Q1 FY27.