CDSL (Central Depository Services Limited) is one of India’s key depository institutions, enabling the storage and management of securities in an electronic form. Its performance over the past seven years serves as a fascinating case study for those seeking financial freedom through long-term stock market investments.
A 10x Bagger in 7 Years
In 2017, CDSL was trading at a bonus/split-adjusted price of ₹130, giving it a market capitalization of ₹2,700 crores. Fast forward to 2024, the stock has crossed ₹1,300, with a market cap now at ₹28,000 crores—representing a tenfold increase in just seven years.
However, this remarkable growth was far from a smooth journey:
- 2017-2019: After an initial surge of ~50% to ₹190, the stock tanked nearly 50% to levels of ₹90-100 over two years. Many investors likely exited due to panic.
- 2019-2021: Those who held on were rewarded, as the stock rallied 8x to ₹800 in just two years.
- 2021-2022: The stock again saw a ~45% correction, falling to ₹450 and testing the conviction of investors.
- 2022-2024: Over the next 15 months, the stock rebounded over 3x, reaching ₹1,300+.
Lessons from CDSL’s Growth
The journey of CDSL highlights that stock market success often demands immense patience and conviction. Investors who maintained their belief in the company through significant downturns were rewarded with exponential returns. This also demonstrates that multi-bagger stocks are not handed on a platter but test an investor’s resolve during difficult times.
Financial Performance: 5-Year CAGR
- CDSL’s revenue and profit growth have been strong, driven by increasing digitization and growing participation in the securities market.
- The 5-Year CAGR (Compound Annual Growth Rate) of the company reflects consistent performance in revenue, profits, and stock price, aligning with its role as a key player in India’s financial infrastructure.
How CDSL Earns
According to its revenue streams, CDSL earns from the following:
- Annual Issues: ₹254 crores (31%)
- Transaction Charges: ₹222 crores (27%)
- Online Data: ₹160 crores (20%)
- IPO Charges: ₹93 crores (11%)
- E-CAS Charges: ₹34 crores (5%)
- Other Charges: ₹49 crores (6%)
Here is a table summarizing the recent quarterly results for Central Depository Services Limited (CDSL) from Screener:
| Quarter Ending | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 |
|---|---|---|---|---|
| Revenue (₹ Cr) | 157.16 | 148.08 | 159.10 | 157.46 |
| Net Profit (₹ Cr) | 94.52 | 85.77 | 87.80 | 93.29 |
| EPS (₹) | 8.95 | 8.13 | 8.33 | 8.86 |
The revenue and profit figures indicate consistent performance, with a stable trend in EPS over recent quarters. For more detailed financial metrics, you can visit the Screener page for CDSL.
Future Prospects and Stock Forecast
Growth Drivers
- Increasing Retail Participation
The growing interest in equity investment among India’s youth and retail investors will ensure sustained demand for demat accounts. - IPO Boom
With more companies going public, CDSL is set to benefit from increased IPO processing fees. - Digital Finance Initiatives
Government programs promoting digital investments and compliance will bolster CDSL’s role in the financial ecosystem.
Stock Forecast
- 2025 Target: ₹1,500–₹1,800 per share
- 2028 Target: ₹2,200–₹2,500 per share
Analysts expect CDSL’s revenue and profit to grow at a CAGR of 15–18% and 18–20%, respectively, over the next five years.
Risks to Consider
Despite its strong fundamentals, investors should consider potential risks:
- Regulatory Changes: New SEBI or government rules could impact CDSL’s operations.
- Competition from NSDL: CDSL faces stiff competition from its counterpart, NSDL.
- Market Volatility: A slowdown in stock market activity could reduce transaction volumes and revenue.
Conclusion
CDSL’s robust business model and diversified revenue streams make it a compelling investment for those seeking financial freedom through equity markets. As India’s financial markets continue to grow, CDSL is uniquely positioned to benefit from the increasing digitization of financial assets.
For long-term investors, CDSL offers a stable and growing income-generating business, backed by strong industry tailwinds.
What’s your view on CDSL’s growth potential? Share your thoughts below!
