Central Depository Services (India) Ltd. share price target

Revenue growth impacted due to market headwinds leading to negative operating leverage: For 3QFY19, CDSL's revenue declined 10% YoY to INR462mn. This was majorly due to reduction in IPO/ Corporate Action charges (-52% YoY) followed by Transaction charges (-25%), Online Data charges (-8%) and other charges (-8%). IPO revenue got impacted due to reduction in number of IPOs given weak market sentiment. Revenue from Transaction charges reduced due to poor delivery based volume during Q3FY19. However, we expect revenues to revive in 2HFY20E following...

We maintain our BUY rating, have assigned 30x multiple to core Dec-20 earnings and added back net cash to arrive at a TP of Rs 330 (~46% upside). CDSL posted disappointing 3QFY19, both revenue and margin performance were lower than expectations. Revenue was down 13.1% QoQ to Rs 462mn (vs est. of Rs 549mn). Drop was led by 7.4/30% QoQ drop in Transaction/Online-data-charges revenue (CVL KYC). Discontinuation of OTP based Aadhaar e-KYC has led to lower volumes from the on-line channel.

Central Depository Services (CDSL) is one of two depositories in India and the only one to be listed. The BSE initially promoted CDSL,but subsequently diluted its stake to leading banks, which became CDSL's 'Sponsors'.

We maintain our BUY rating, have assigned 33x multiple to core Sep-20 earnings and added back net cash to arrive at a TP of Rs 380 (~59% upside form CMP). CDSL posted robust 2QFY19, both revenue and margin performance was better than expectation. Revenue was up 17.4% QoQ to Rs 531mn (vs est. of Rs 433mn). Growth was led by 6.2/48.5% QoQ rise in Transaction/Online data charges revenue (MF KYC). Discontinuation of OTP based Aadhaar KYC for MFs led to surge in demand for CVL KYC.

Central Depository Services (CDSL) 1QFY19 operating performance was in line, but lower other income weigh on PAT. Owing to the volatile capital markets, key segments (except data processing) grew at subdued pace. Data...

We maintain our BUY rating, have assigned 33x multiple to core earnings and added back net cash to arrive at a TP of Rs 370 (39% upside from CMP). CDSL posted poor 1QFY19 with fall in revenue but margin was better than expectation. Revenue was down 12.5% QoQ to Rs 453mn (lower than our est of Rs 505mn). Drop was led by 21.3/27.3/18.2% QoQ drop in Transaction/IPO & corporate action/online data charges respectively offset by 6.7% QoQ rise in annual issuer charges. Margin fall was lower than expected, down 24bps QoQ to 56.8% vs our estimate of 55.4%. CDSL continued to gain BO market share (~47% in 1QFY19, +48bps QoQ).

Revenue In-line; Lower Other Income Reduces PAT Central Depository Services (CDSL) has reported an in-line revenue performance in 1QFY19, which rose 11.7% YoY (-12.5% QoQ) to Rs453mn (1.5% above our estimate). Key business segments grew at a subdued pace with a marked slowdown from growth recorded in the previous quarter. Transaction Charges revenue rose by 7% YoY (42% YoY in 4QFY18), IPO/ Corporate Action Charges revenue rose by 8.6% YoY (70.8% YoY in 4QFY18) and KYC/Online Data Charges rose by 11.2% YoY (59.9% YoY in 4QFY18). Segment-wise, Depository Services revenue rose by 18.5% YoY to Rs352mn. On the flip side, Data Processing revenue declined by...

Central Depository Services (India) (CDSL) stable revenue base and fixed cost model enables the company to register strong margins in line with revenue growth. Repeat business in multiple offerings across DP's, corporate, capital market intermediaries, insurance companies and others has enabled the company to clock ~21% CAGR top-line growth over FY14-FY18, while cost (employee) increased by only 14% during the same period. High FCF generation, stable dividend policy (~40%) and a strong balance sheet (net cash of Rs5.5bn, at end of FY18) provide further support. Stable growth in...

We assign a P/E multiple of 33x to core earnings and add net cash to arrive at a TP of Rs 415 (40% upside from CMP). At 25/21x FY19/20E earnings we see value and maintain our BUY rating. CDSL posted a muted 4QFY18 with flat revenue and lower margins. Revenue was up 0.8% QoQ to Rs 518mn (in-line with our est of Rs 518mn). Growth was led by 5.8/7.7% QoQ growth in Annual issuer charges/online data charges (KYC) offset by 3.5/2.8% fall in transaction revenue/IPO & corporate action charges respectively.