CDSL IPO: Brokerage Views & Runup to IPO

This post on CDSL IPO tries to bring out consolidated brokerage views opinions, IPO Review / Analysis, Note/ reports and recommendation of brokerages , Analyst, Business New papers, Management views, information on Anchor investors, Subscription etc on CDSL IPO and shall be updated continuously till the closure of the issue. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to CDSL IPO or not.

Related Posts: CDSL IPO Review
CDSL IPO: Check Allotment Status Here : Check Allotment Status Here

CDSL IPO: Grey Market Premium etc.

20/6/17 Grey Market Premium Rs. 82
19/6/17 Grey Market Premium Rs. 90
17/6/17 Grey Market Premium Rs. 100-102 

Subscription: CDSL IPO  ( x times)
  QIB NII Retail Total
Day 3  148.71  563.03  26.03  170.16
Day 2   6.54  3.36    10.32 0.93
Day 1  0.97 0.61  3.48  2.09
Complete Anchor List

Central Depository Services (India) Limited (CDSL), has raised Rs 154 crore ahead of its initial public offer, by allotting share to 15 anchor investors.The anchor investors included FIL Investments (Mauritius) Ltd, ICICI Prudential Dividend Yield Equity Fund, HDFC Standard Life Insurance Co. Ltd, IDFC Equity Fund, HSBC Indian Equity Mother Fund, Axis Mutual Fund, IIFL Special Opportunities Fund, Abu Dhabi Investment Authority, and Goldman Sachs India Limited.
  Click here for Complete Anchor List

Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on CDSL IPO .

Nirmal Bang: “CDSL has delivered a strong performance over FY15-17 wherein the
revenue from operations grew at a CAGR of 17.8% from Rs. 105.3 Cr in FY15 to Rs. 146 Cr in FY17. Adj. Net profit increased from Rs. 56.5 Cr in FY15 to 85.8 Cr in FY17. Since the industry has high entry barriers the existing two depositories will to continue to maintain their market positioning. Given the stable growth in the financial performance, strong cash generation, healthy return on equity and a high cash on
books (~35% of market capitalization at upper price band), we feel the issue is attractively priced compared to similar profile of high cash generating service companies. At Upper band of Rs. 149, CDSL is offered at 12.6x EV/EBITDA of FY17 earnings and 18.2x PE, which looks attractive. Thus, we recommend subscribing to the issue.”

Angel Broking: “CDSL has a unique business model with high entry barriers coupled with decent growth prospects. The average ROE for the last six years has been ~17%, which we believe will sustain going ahead as well. The incremental capital required for doing business in this space is very minimal and this makes it an interesting business model. At the issue price band of `145-149, the stock is offered at 17. 7x-18.2x its FY2017 Earnings, which we believe is reasonably priced, and hence, recommend SUBSRIBE to the issue..”

SPA Securities: “CDSL which holds 60% of incremental market share of BO account
is likely to benefit from rising per capita income, growing Indian financial market and gamut of value added services. CDSL generates 39% of revenue (as against 7% for NSDL) from annual fees, provides strong revenue visibility. Other services like commodity repository (to be launched shortly), KYC services, e-notice, e-insurance account, NAD project, e-will, etc should aid topline and bottomline going forward. At the upper end of the price band, the stock is available at P/E of 18.0x based on FY17 earnings, which is reasonable considering strong parentage, debt free balance sheet, high operating (~59%) & net profit margin (~53%) and decent RoE (~16%). Further, CDSL’s cash and investments accounts for ~35% of market cap, provides adequate margin of safety. We recommend SUBSCRIBE to the issue with long term perspective.”

KR Choksey: “CDSL being cost effective as compared to NSDL has resulted company to outpace overall industry growth. It believes, valuations are reasonable given the robust business outlook along with decent financial performance over FY12-17. Hence, we recommend subscribe rating on the issue..”

Business Standard:CDSL IPO offers growth at a reasonable price” Click Here for Details

Motilal Oswal: ” The key positive about the company is that it has controlled operating expenses in last 3 years which has led to significant margin expansion of 1150 bps since FY15 to 54 percent in FY17.”

GEPL Capital: ““CDSL Ltd stands to gain from operating leverage. At a P/E of 27.34x of FY17 EPS. We believe that it demands a discount to its domestic peers. We assign a Subscribe rating to the IPO.”

Religare: “Securities depository business is more of steady growth business model with operating leverage a key factor in improving earnings growth. CDSL’s  largely fixed operating costs result in high economies of scale. At the upper end of the price band, CDSL is valued at ~18x FY17 P/E. Since CDSL’s only competitor remains unlisted, there is no benchmark to compare these valuations. However, it is a high entry barrier business with robust business outlook and decent financial performance. “

SMC : “CDSL, promoted by BSE, will continue to diversify their product and service offerings depending on investors’ needs. Companies continue to focus on developing new DPs relationships and leveraging existing DP network and also to introduce new offerings and scale up recently started businesses. On a consolidated restated basis, its total revenue grew at a CAGR of 13.33% and net profit after tax grew as restated at a CAGR of 21.96% in Fiscal 2017. Considering all these positive factor, the outlook of the company looks bright. Investors with long time horizon may consider for investment.”

SP Tulsiyan website: “Complementary services like commodity repository (approval in place, to be launched shortly), KYC services via subsidiary CDSL Ventures, e-insurance accounts, e-will etc. in addition to regular annual issuer and transaction charges should aid topline and bottomline going forward. Giving sound fundamentals, sector tailwinds and inexpensive pricing, the issue is a subscribe.”

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