CDSL - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.3
| Stock Code | CDSL | Market Cap | 25,713 Cr. | Current Price | 1,230 ₹ | High / Low | 1,829 ₹ |
| Stock P/E | 53.5 | Book Value | 67.4 ₹ | Dividend Yield | 1.02 % | ROCE | 46.5 % |
| ROE | 36.3 % | Face Value | 10.0 ₹ | DMA 50 | 1,446 ₹ | DMA 200 | 1,495 ₹ |
| Chg in FII Hold | 0.86 % | Chg in DII Hold | 0.94 % | PAT Qtr | 120 Cr. | PAT Prev Qtr | 128 Cr. |
| RSI | 24.4 | MACD | -52.3 | Volume | 57,85,378 | Avg Vol 1Wk | 27,63,731 |
| Low price | 1,047 ₹ | High price | 1,829 ₹ | PEG Ratio | 2.60 | Debt to equity | 0.00 |
| 52w Index | 23.4 % | Qtr Profit Var | 14.3 % | EPS | 23.0 ₹ | Industry PE | 49.1 |
📊 Financials: Central Depository Services Ltd. (CDSL) demonstrates strong profitability with ROE at 36.3% and ROCE at 46.5%, reflecting excellent capital efficiency. Debt-to-equity ratio of 0.00 highlights a debt-free balance sheet. Quarterly PAT at 120 Cr is slightly lower than the previous quarter (128 Cr), but year-on-year profit variation of 14.3% shows healthy growth. EPS of 23.0 ₹ supports earnings visibility.
💹 Valuation: Current P/E of 53.5 is above the industry average (49.1), suggesting premium valuation. P/B ratio ~18.3 (Price 1,230 ₹ / Book Value 67.4 ₹) is expensive. PEG ratio of 2.60 indicates stretched valuation relative to growth. Dividend yield of 1.02% provides modest income support. Despite high valuations, intrinsic strength lies in monopoly-like positioning in the depository services space.
🏢 Business Model: CDSL operates as one of India’s two depositories, providing electronic storage of securities. Its competitive advantage lies in regulatory backing, near-monopoly status, and recurring revenue streams from demat accounts and transactions. Strong institutional confidence with FII (+0.86%) and DII (+0.94%) increases further strengthen outlook.
📈 Entry Zone: Attractive accumulation zone between 1,100–1,180 ₹, closer to support levels and below DMA200 (1,495 ₹). RSI at 24.4 indicates oversold conditions, while MACD (-52.3) suggests bearish momentum. Long-term investors can accumulate gradually at lower levels.
🔒 Holding Guidance: Fundamentally strong with debt-free operations, high ROE/ROCE, and monopoly-like business model. Suitable for long-term holding, though valuations are stretched. Accumulate on dips for margin of safety.
Positive
- Debt-free balance sheet enhances financial resilience.
- Strong ROE (36.3%) and ROCE (46.5%) highlight efficiency.
- Monopoly-like positioning in depository services.
- Institutional confidence with FII and DII increases.
Limitation
- High P/E (53.5) and P/B (18.3) indicate expensive valuation.
- PEG ratio of 2.60 highlights stretched valuation relative to growth.
- Dividend yield of 1.02% offers limited income support.
- Quarterly PAT decline (120 Cr vs 128 Cr) shows slowing momentum.
Company Negative News
- No major negative news reported, but valuations remain elevated and profit momentum has softened.
Company Positive News
- Strong institutional confidence with FII and DII increases.
- Debt-free operations strengthen balance sheet.
- Monopoly-like positioning ensures recurring revenue streams.
Industry
- Capital markets sector benefits from rising retail participation and demat account growth.
- Industry P/E at 49.1 suggests optimism in the sector.
- Regulatory backing ensures stability and long-term demand.
Conclusion
✅ CDSL is financially strong, debt-free, and enjoys a monopoly-like position in India’s depository services. Despite stretched valuations, its high ROE/ROCE and recurring revenue streams make it a promising long-term investment. Accumulation near 1,100–1,180 ₹ is recommended for patient investors.
I can also extend this with a DCF-based intrinsic value estimate to check if CDSL’s premium valuation is justified against its future cash flow potential. Would you like me to add that?