Central Depository Shares Surge Over 1.5% on Strong Q2 Results and Positive Outlook

Dhaneshwar Prasad

Central Depository Service (India) Limited (CDSL), one of India’s leading depository participants, saw its shares gain over 1.5% on Wednesday morning trade after the company posted strong Q2 FY2023 results and gave a positive business outlook.

CDSL Stock Jumps to All-Time High on Stellar Q2 Performance

Shares of CDSL opened 1.6% higher at ₹1,852 on the BSE, surpassing its previous all-time high. The stock extended gains during the morning trade to hit an intraday high of ₹1,872.55, marking a nearly 2% upside.

CDSL’s positive run came on the back of its Q2 FY2023 earnings release yesterday, wherein the company reported a 38% year-on-year rise in consolidated net profit at ₹108.85 crore compared to ₹78.84 crore in the same quarter last year.

The company’s total income for the September quarter climbed 33% to ₹230.36 crore versus ₹173.29 crore in Q2 FY2022.

Strong Growth Across All Key Metrics

CDSL witnessed strong growth across all key metrics during the quarter under review. The company added 73 lakh new active Demat accounts, which is significantly higher than the 59 lakh accounts added in Q2 FY2022.

This took CDSL’s overall base to 4.7 crore active Demat accounts as of September 30, 2022, commanding a market share of 70%.

Average daily transactions zoomed to 54.78 lakh in Q2 FY2023, a huge 56% jump over 35.12 lakh in the corresponding period last fiscal.

The number of new Demat requests also spiked substantially by over 48% YoY to 2.02 crore. Meanwhile, CDSL’s corporate investor base expanded by over 10,300 clients to reach 1.56 lakh.

New Highs in Key Operating Metrics Signals Strong Growth Trajectory

Commenting on the results, CDSL Managing Director and CEO Nehal Vora said:

We are delighted to have achieved several new milestones during the quarter across all our key operating metrics, indicating a strong growth trajectory going forward.

He added that the company remains focused on bolstering technological prowess to enhance user experience through new products and digital channels.

CDSL’s robust Q2 performance and optimistic outlook seemed to have enthused investors, reflected in the uptick in its stock price.

Q2 Beat Aids Positive Stock Re-rating

According to market analysts tracking the stock, CDSL’s better-than-expected Q2 numbers could lead to a re-rating of the stock.

They highlighted that CDSL’s annualized Q2 EPS of ₹16.8 translates into a 35x P/E multiple at the current price. This looks reasonable given its dominant 70% market share status and strong 33% earnings CAGR over FY2018-22.

Analysts also noted the stock’s discount to global depository peers like CDS (Brazil) which trades at 49x P/E. They expect CDSL’s premium valuations to sustain given its duopoly position and high growth visibility.

Fundamental and Technical Outlook Looks Promising

CDSL stock has given stellar 66% returns over the past one year. It has rallied over 73% year-to-date in 2022 outperforming benchmark indices by a wide margin.

The stock witnessed strong buying interest near ₹1,150 levels a few months back. It found support at the 20-day moving average line during the recent market correction in the last week of November 2022.

The relative strength indicator (RSI) at 64 shows bullish momentum in the stock. The uptrend remains intact with the stock trading well above all key short and long-term moving averages.

As per analysts, the stock has strong support at ₹1,700 and ₹1,620 levels being previous breakout zones. They see limited downside risk given the positive fundamental triggers and bullish technical setup.


Backed by robust growth, dominant market position, high earnings visibility and favorable risk-reward ratio, analysts maintain a bullish outlook on the CDSL counter from a medium to long-term perspective.

They advise investors to continue holding the stock and also use dips to add more as they see plenty of steam left for further upside. Target prices pegged by analysts range from ₹2,100-2,350 over the next 12 months.

Share This Article
Former Sony professional turned multi-business owner and stock investor, Dhaneshwar leverages his MBA to produce market, IPO and biz content and personal investments on Indimarket.in.
Leave a comment