Central Depository Services Ltd. (CDSL) was listed on the NSE on June 30, 2017. In the last five years, the company has given a massive return of more than 800% to its investors. Will CDSL continue to provide such great returns in the future as well? Let’s explore CDSL growth potential and CDSL share price target from 2025 to 2050 in this article
About CDSL
Central Depository Services Limited (CDSL) is a company that helps people keep their stocks and bonds in an electronic form, making it easy to buy and sell them. It was set up in 1999 and is one of the two main depositories in India, along with NSDL. CDSL helps investors, stock brokers, and companies manage their shares safely and efficiently. It improves the way people trade in the Indian stock market by making the process faster and more secure.
CDSL Business Model
- Fees for Holding Securities: CDSL makes money by charging investors and brokers a fee for holding their stocks and bonds in electronic form.
- Transaction Fees: Whenever an investor buys or sells securities, CDSL charges a small fee for processing these transactions.
- Annual Maintenance Fees: CDSL charges investors an annual fee for keeping their accounts and securities safe.
- Services for IPOs and Other Events: When companies issue new shares or pay dividends, CDSL charges fees for handling these activities for investors.
- Selling Data and Information: CDSL earns money by providing data and information about securities to financial institutions.
- Fees for Using Online Tools: CDSL charges investors and brokers for using its online systems and tools to trade and manage their securities.
CDSL Fundamental Analysis
| Stock Name | CDSL Ltd. |
|---|---|
| Market Cap | ₹ 27,839 Cr. |
| 52W High | ₹ 1,990 |
| 52W Low | ₹ 811 |
| Stock P/E | 50.1 |
| Book Value | ₹ 73.2 |
| Dividend Yield | 0.71 % |
| ROCE | 40.2% |
| ROE | 31.3 % |
| Face Value | ₹ 10.0 |
| Shareholders | Mar 2023 | Mar 2024 | Dec 2024 |
|---|---|---|---|
| Promoters | 20.00% | 15.00% | 15.00% |
| FIIs | 14.67% | 11.38% | 17.15% |
| DIIs | 18.48% | 23.15% | 19.11% |
| Public | 46.85% | 50.47% | 48.74% |
| No. of Shareholders | 8,28,853 | 8,34,101 | 11,73,419 |
Key Factors Driving CDSL Future Growth
- More People Opening Demat Accounts: As more people open demat accounts to hold their stocks electronically, CDSL will grow by providing its services.
- More People Investing in the Stock Market: As more people start investing in stocks, CDSL will get more business from the increasing number of transactions.
- Government Support for Digital Services: With the government’s push for digital finance, CDSL will grow as more trading and investing happen online.
- New Services Offered by CDSL: CDSL is adding new services like electronic voting and IPO handling. This will help attract more customers and increase its business.
- Popularity of Mutual Funds and ETFs: With more people investing in mutual funds and Exchange-Traded Funds (ETFs), CDSL will see more demand for its services to hold these investments electronically.
- Use of New Technology: CDSL is using new technology to make its services quicker and safer, which will help attract more customers.
- Increase in IPOs: As more companies list on the stock market through IPOs, CDSL will play a key role in managing these shares, bringing in more revenue.
Pros of Investing in CDSL
- Duopoly: CDSL and NSDL are the only companies in India that offer depository services. As a result, all the business in this sector is distributed between these two companies.
- Debt-Free Company: CDSL is almost a debt-free company, which means it is financially stable and can invest in its future growth without worrying about loans.
- Consistent Growth: CDSL has delivered good profit growth of 30% CAGR and good sales growth of 33% over the last 5 years.
- High ROCE and ROE: The company’s ROE is 31.3%, and its ROCE is 40.2%, reflecting the efficient use of funds to generate profits.
- High Operating Profit Margin: The operating profit margin of CDSL is around 60%, which is more than most of the companies in the Indian stock market.
- Increase in FIIs Holding: Foreign Institutional Investors (FIIs) have increased their stake in CDSL from 11.38% in March 2024 to 17.15% in December 2024. This rise indicates growing foreign investor confidence in the company’s performance and future growth.
Cons of Investing in CDSL
- High Price-to-Earnings (P/E) Ratio: As of December 2024, CDSL’s stock is trading at a P/E ratio of 50.3, which is significantly higher.
- High Price-to-Book (P/B) Ratio: The company’s P/B ratio is around 17.0 as of February 2025, indicating that investors are paying 17 times the company’s book value.
- Market Conditions Affect Business: CDSL’s business depends a lot on how the stock market is doing. If the market faces a downturn, CDSL’s earnings could drop too.
- Strong Competition: CDSL faces strong competition from NSDL in the same industry, which could affect its market share and growth.
- Low Promoter Holding: As of December 2024, the promoter only holds 15% of the company.
| Years | Target Price |
|---|---|
| CDSL Share Price Target 2025 | ₹1,800 to ₹2,000 |
| CDSL Share Price Target 2026 | ₹2,150 to ₹2,600 |
| CDSL Share Price Target 2027 | ₹2,600 to ₹3,400 |
| CDSL Share Price Target 2028 | ₹3,100 to ₹4,400 |
| CDSL Share Price Target 2029 | ₹3,750 to ₹5,700 |
| CDSL Share Price Target 2030 | ₹4,500 to ₹7,500 |
| CDSL Share Price Target 2035 | ₹10,000 to ₹20,000 |
| CDSL Share Price Target 2040 | ₹20,000 to ₹60,000 |
| CDSL Share Price Target 2050 | ₹80,000 to ₹1,80,000 |
Conclusion
CDSL is an important company in India that helps manage stocks and bonds electronically. It has been doing well financially and has strong growth potential. However, there are some risks, like its high stock price, reliance on the stock market, and competition from other companies. While CDSL’s future looks good because more people are getting involved in the stock market, investors should think carefully about both the good and bad sides before deciding to invest. For more information, check CDSL official website.
Disclaimer
This article is for educational purposes only. It is not a stock recommendation and should not be treated as such. Please ask your financial advisor before making any investment decision.
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