CDSL crosses milestone of 10 crore demat accounts; depository stock zooms

Central Depository Services (India) Ltd (CDSL) shares zoomed on Thursday after the depository services provider said it had reached the milestone of more than 10 crore registered demat accounts. CDSL—the only listed depository in the country—said that it became the first depository to register 10 crore demat accounts. 

Central Depository Services shares were last seen trading with a gain of Rs 87.7, or 5.1 per cent, at Rs 1,806.7 apiece in the first hour of trade on BSE, having gained by as much as Rs 106, or 6.2 per cent, to Rs 1,825 to trade within Rs 72 of a 52-week high scaled last week. 

Brokerage Nuvama Wealth raised its target price for CDSL shares by Rs 350, or 21 per cent, to Rs 2,020 while maintaining its 'buy' rating on the stock. Its target implies an upside of 17.5 per cent from the previous close.

What is CDSL?

Founded in 1999, Mumbai-headquartered Central Depository Services (India) Ltd (CDSL) facilitates holding and transacting securities in electronic form, as well as settlement of trades on stock exchanges.

How CDSL fared in Q2 

CDSL staged a strong financial performance for the second quarter of the current financial year. Its consolidated net profit jumped 35.4 per cent on a year-on-year basis to Rs 108.9 crore for the quarter ended September 30, 2023, according to a regulatory filing. 

The depository's top-line marked an increase of 39.2 per cent to Rs 207.3 crore for the three-month period. 

The company's board declared a dividend of Rs 16 per equity share.

CDSL's top five shareholders include BSE Ltd (15 per cent), Standard Chartered Bank (7.2 per cent) and LIC (4.4 per cent). 

What is a stock depository?

A depository is a facilitator for the holding of securities in the dematerialised or demat form. In other words, a depository acts as an enabler for security transactions.

What does CDSL do?

CDSL maintains and services more than 10 crore demat accounts of investors or beneficial owners (BOs) spread across the country.

The company services these beneficial owners through its more than 580 depository participants from more than 20,000 locations. 

Besides, Central Depository Services also offers a host of services to financial intermediaries as well as the market through its subsidiaries. 

Here's a list of some of its units: 

• CDSL Ventures Ltd (CVL), a wholly-owned subsidiary of CDSL, acts as a KYC registration agency. It conceptualised, designed and implemented the KRA system in association with mutual fund body AMFI for all mutual funds in 2008. Today, CVL has more than 4.6 crore fully digitised KYC records.
• CDSL Insurance Repository Ltd (CDSLIR) is a registered insurance repository (IR). An IR maintains data on insurance policies in electronic form on behalf of insurers. 
• CDSL Commodity Repository Ltd (CCRL) allows entities such as farmers, farmers producer organisations (FPOs) and manufacturers to obtain electronic warehouse receipts (negotiable or non-negotiable) in a demat account against the commodities deposited in registered warehouses. 

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