CDSL - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.8

📊 Fundamental Analysis

CDSL (Central Depository Services Ltd.) is a high-quality business with excellent profitability metrics, but its valuation is stretched. Here's the breakdown

Metric Value Implication

Market Cap ₹32,180 Cr Large-cap; strong market presence

Stock P/E 65.1 Expensive; significantly above industry PE of 51.3

PEG Ratio 3.39 Overvalued relative to growth; caution advised

ROCE / ROE 42.0% / 32.7% Exceptional; indicates strong capital efficiency and profitability

Dividend Yield 0.62% Modest; not a major income play

Debt-to-Equity 0.00 Debt-free; excellent financial health

EPS ₹23.7 Solid earnings base

Qtr Profit Var -23.7% Recent earnings dip; needs monitoring

FII/DII Holding Change +1.56% / -1.17% FII interest rising; DII trimming exposure

📉 Technical Analysis

Current Price: ₹1,540

DMA 50 / DMA 200: ₹1,636 / ₹1,464 → Trading below 50 DMA but above 200 DMA; mildly bearish

RSI: 32.0 → Oversold zone; potential for technical rebound

MACD: -25.2 → Bearish momentum

Volume: Slightly below average; no panic selling

💰 Valuation & Entry Zone

Despite stellar ROE and ROCE, the high P/E and PEG ratio suggest the stock is overvalued at current levels. Ideal entry zone

₹1,350–₹1,450

This range aligns with 200 DMA and offers a better risk-reward ratio

Avoid fresh entry above ₹1,600 unless earnings growth accelerates.

📈 Long-Term Investment Outlook

Pros

Debt-free and highly profitable

Strong ROE and ROCE

FII interest increasing

Monopoly-like position in depository services

Cons

Expensive valuation (PEG 3.39)

Recent earnings decline

Low dividend yield

Technical weakness

CDSL is a high-quality business, but long-term returns will depend on growth catching up with valuation.

🏁 Exit Strategy / Holding Period

If you already hold this stock

Short-Term: Hold; RSI suggests near-term bottoming

Medium-Term: Consider partial exit near ₹1,750–₹1,850 if valuation remains stretched

Long-Term: Hold for 3–5 years if PEG drops below 2 and EPS growth resumes >20% YoY

Exit fully if price crosses ₹2,000 without earnings support, or if ROE drops below 25% for consecutive quarters.

Would you like a comparison with NSDL or other fintech infrastructure plays to assess relative value?

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