Equity Research Report
Summary
CDSL's business remains stable on strong recurring revenue — annual issuer charges and transaction income — and is set to benefit from India's capital-market growth, with nearly 20 lakh new demat accounts added every month and a healthy IPO pipeline.
Over the long term, CDSL is well positioned to benefit from increasing financialization, rising retail participation, and its dominant market share in the depository industry. Its asset-light, debt-free model and limited capex requirements support strong cash generation and earnings visibility. Easing geopolitical uncertainty and improving sentiment could further boost trading volumes, IPO activity and investor participation.
Our DCF indicates a fair value of approximately ₹636 per share. However, DCF does not fully capture CDSL's moat, asset-light model and structural growth potential — historically, the stock has traded well above intrinsic value, reflecting the premium the market has assigned to its structural growth and asset-light model.
Key Facts
Business Model
CDSL operates in a highly specialised segment with limited competition, holding close to 80% market share in the Indian depository industry. Most new investors open demat accounts through depository participants associated with CDSL, so the company benefits from a steadily expanding customer base.
Annual issuer and account maintenance charges contribute roughly 43% of revenue — predictable, recurring income. Transaction charges are around 22% and stay linked to market activity. The addition of nearly 20 lakh demat accounts every month keeps strengthening that recurring base.
Looking ahead, a recovery in capital-market activity, more IPO launches, higher trading volumes and growth in corporate actions act as key catalysts on top of the ongoing financialization of Indian savings.
| ₹ Cr | Issuer | Txn | IPO / CA | Data | Other | Total |
|---|---|---|---|---|---|---|
| Q4FY25 | 87 | 49 | 25 | 42 | 53 | 256 |
| Q1FY26 | 114 | 62 | 21 | 36 | 62 | 295 |
| Q2FY26 | 115 | 59 | 62 | 46 | 59 | 341 |
| Q3FY26 | 113 | 60 | 59 | 49 | 53 | 334 |
| Q4FY26 | 114 | 59 | 17 | 49 | 29 | 268 |
Demat Growth
Demat account additions are the core growth driver — every net account added compounds into recurring annual maintenance revenue.
| Month | Opened | Closed | Closing | Net add |
|---|---|---|---|---|
| Feb 2026 | 25,24,574 | 1,43,926 | 17,82,82,918 | +23,80,648 |
| Mar 2026 | 23,30,178 | 4,89,249 | 18,01,23,835 | +18,40,929 |
| Apr 2026 | 20,80,094 | 1,52,825 | 18,20,51,087 | +19,27,252 |
| May 2026 | 19,96,617 | 2,21,360 | 18,38,26,328 | +17,75,257 |
Financials
Consistent revenue and profit growth, driven by the democratization of equity investing in India — particularly the post-COVID surge in demat account openings. FY26 margins compressed on a step-up in operating expenses.
| 2022A | 2023A | 2024A | 2025A | 2026A | |
|---|---|---|---|---|---|
| Sales | 551.3 | 555.1 | 812.3 | 1,082.2 | 1,144.9 |
| % growth | — | 1% | 46% | 33% | 6% |
| Operating expenses | 158.9 | 196.8 | 259.5 | 342.2 | 563.2 |
| EBITDA | 365.5 | 318.9 | 488.3 | 624.8 | 581.8 |
| % margin | 66.3% | 57.5% | 60.1% | 57.7% | 50.8% |
| Depreciation | 11.5 | 19.5 | 27.2 | 49.0 | 66.2 |
| EBIT | 354.0 | 299.4 | 461.1 | 575.8 | 515.6 |
| Other income | 54.6 | 65.9 | 95.1 | 119.2 | 93.6 |
| Profit before tax | 408.6 | 365.2 | 556.0 | 694.9 | 609.0 |
| Tax | 96.7 | 89.2 | 136.5 | 168.6 | 153.9 |
| Net profit | 311.8 | 276.0 | 419.6 | 526.3 | 455.1 |
| % of revenue | 56.6% | 49.7% | 51.7% | 48.6% | 39.7% |
| 2022A | 2023A | 2024A | 2025A | 2026A | |
|---|---|---|---|---|---|
| Equity share capital | 104.5 | 104.5 | 104.5 | 209.0 | 209.0 |
| Reserves | 988.4 | 1,109.2 | 1,358.8 | 1,551.3 | 1,750.8 |
| Borrowings | 0.29 | 2.37 | 1.36 | 2.98 | 2.20 |
| Other liabilities | 232.4 | 240.8 | 316.7 | 398.8 | 457.1 |
| Total | 1,325.6 | 1,456.9 | 1,781.4 | 2,162.1 | 2,419.0 |
| Net block | 106.2 | 124.6 | 341.5 | 446.4 | 502.0 |
| Capital work in progress | 3.80 | 174.3 | 3.82 | 7.13 | 5.53 |
| Investments | 925.5 | 936.7 | 1,149.3 | 1,351.5 | 1,487.1 |
| Receivables | 45.8 | 37.7 | 66.8 | 52.8 | 64.6 |
| Cash & bank | 205.9 | 71.0 | 52.9 | 174.2 | 83.1 |
| Other assets | 38.4 | 112.7 | 167.1 | 130.1 | 276.8 |
Projections
We model a tapering growth curve from 25% in FY27 to 17% by FY31, taking revenue to roughly ₹2,966 Cr — a ~2.6x increase over FY26.
| Year | FY27E | FY28E | FY29E | FY30E | FY31E |
|---|---|---|---|---|---|
| Revenue growth | 25% | 23% | 21% | 19% | 17% |
| Revenue (₹ Cr) | 1,431 | 1,760 | 2,130 | 2,535 | 2,966 |
Positioning
The Indian depository sector remains underpenetrated, leaving long-term headroom for both players. CDSL has built a leadership position in the retail segment and has consistently gained share.
Most leading stockbrokers are already integrated with CDSL as their depository participant, creating a real switching cost and reinforcing customer stickiness. Given the duopoly structure and limited competitive intensity, CDSL faces relatively low risk of margin pressure or heavy capex — which supports profitability and earnings visibility.
Valuation
CDSL is not a cheap stock on traditional P/E standards, but the premium is justified by an asset-light model, near-zero capex requirements and compounding earnings growth.
| EV/Sales | EV/EBITDA | P/E | |
|---|---|---|---|
| CDSL | 22.0x | 43.3x | 55.6x |
| NSDL | 10.3x | 36.5x | 42.7x |
| P/E | ~55.6x |
| P/B | ~13x |
| EV/Sales | 22x |
| EV/EBITDA | ~43.3x |
| Debt / Equity | 0.00x |
DCF alone understates the franchise. Historically, the stock has traded well above intrinsic value — a premium the market has assigned to CDSL's long-term structural growth and asset-light model, rather than to near-term DCF fair value.
Key Risks
Request a Stock Research Report
Fundamental, technical, KPI and DCF analysis presented in one report for educational and informational purposes.
Research reports and responses are provided for educational and informational purposes only and do not constitute personalized investment advice or a recommendation to buy, sell or hold any security.
FAQ
The report brings together business analysis, financial information, KPI tracking, peer comparison and DCF-based valuation to explain the company and the assumptions used in the analysis.
It covers the company's business model, financial performance, key operating factors, valuation metrics, DCF assumptions, peer context and relevant risks.
The analysis reflects information and assumptions available when the report is prepared. New financial results, business developments, policy changes or broader market conditions can change the underlying analysis.
The valuation section shows the assumptions and calculations used in the analysis. Changes in revenue growth, margins, cash flows, discount rates or other assumptions can materially change the resulting valuation.
Latest analysis
All posts →Valuation analysis of SRIT India; Business Model, DCF Valuation and Risk Analysis
Particulars Value Enterprise Value ₹1,118.03 crore Less: Net Debt ₹44.81 crore Add: Cash & Investments ₹21.69 crore Equity…
Orient cable Valuation analysis: DCF Fair Value, Revenue Forecast and Scenario Analysis
Particulars Value Enterprise Value (₹ crore) 3,466.83 Less: Net Debt (₹ crore) 234.28 Add: Cash & Investments (₹…
Runwal Enterprises IPO Valuation Analysis; A DCF analysis
DCF-based valuation and business analysis Particulars Value Enterprise Value ₹8,196.78 crore Less: Total Borrowings ₹2,931.60 crore Add: Cash…