CDSL (A Depository worth Depositing your money)

BUSINESS
Bifurcated into Annul Issuer charges, Transaction Charges, IPO/Corporate action charges, Online Data charges & Others.

Annual Issuer Charges: Annual issuer fees and processing fees related to corporate transactions to issuers (listed as well as unlisted live companies). Non-cyclical and not linked to market. The big opportunity related to demat of 60K unlisted public companies is unfolding.

Transaction Charges: Per debit transaction in demat account (i.e. delivery is taken), a nominal fee is charged IPO/Corporate action charges: Listing charges, changes in shareholding etc actions.

Online data charges: KYC documents are held in demateralise form for banks,mutual funds, insurance,stock brokers etc).

Others(e-voting, CAS, Govt etc):Email and statement charges,account charges, e voting charges

Some Diamond Points:
Asset Light Model, High Free Cash Flow Generation and Duopoly Market.
As Equity AUM to GDP is very low in India and no. of people investing into share market has a huge potential the basic reason AMC's are demanding such high valuation the direct benificiary will be CDSL.

Subsidiaries of CDSL.
 CDSL Ventures Limited(CVL)
Undertakes know your client (KYC) services in respect of investors to all capital markets intermediaries.
 CDSL Insurance Repository Limited
Holds insurance policies of various life insurance companies & 3 general insurance companies for holding policies in electronic form.
 CDSL Commodity Repository Limited(CCRL)

Revenue Drivers:

Segments(in mn)	FY16	FY17	FY18	FY19	1H19	1H20	FY20	FY21	FY22
Annual Issuer Charges	481	517	556	672	317	384	805.8914	942.893	1101.915
Growth		7%	8%	21%		21%	19.9%	17.0%	16.9%
Companies in Demat	23382	27919
CDSL share	43%	37%
CDSL share number	10021	10200	10600	12000			13800	15600	17700
Growth		2%	4%	13%
Revenue per Company	0.048	0.051	0.052	0.056			0.058	0.060	0.062
		6%	3%	7%			4.3%	3.5%	3.0%
Transaction Charges	258	312	440	393	199	190	388.7196	469.042	589.4166
Growth		21%	41%	-11%		-5%
No of BO accounts(in mn)	10.8	12.3	14.9	17.4		18.5	19.55737	21.9522	25.07814
Total BO Accounts(in mn)	25.4	27.9	32	35.9		37.4	39.9	43.9	49.2
Growth		10%	15%	12%		4%	7%	10%	12%
% share  of CDSL	43%	44%	47%	48%		49%	49%	50%	51%
Charges per BO account	23.89	25.37	29.53	22.59		20.54	19.88	21.37	23.50
Growth		6%	16%	-24%		-9%	-12%	8%	10%
IPO/Corporate Action	107	165	295	199	121	102	165.75	179.2	230
Growth		54%	79%	-33%		-16%	-17%	8%	28%
No of IPO		112	199	103		40	65	80	115
Revenue per ipo		1.47	1.48	1.93		2.55	2.55	2.24	2.00
Online data Charges	154	187	292	317	170	158	307.49	329.014	358.6256
Growth		21%	56%	9%		-7%	-3%	7%	9%
Others(E-voting,CAS,Gov etc)	228	278	294	367	178	277	472.4554	555.159	644.1516
Growth/Asssumption		22%	6%	25%		56%	29%	18%	16%
Revenue	1228	1459	1877	1948	985	1111	2140.306	2475.31	2924.109
Growth		19%	29%	4%		13%	10%	16%	18%
Other Income	384.8	408.5	346.5	491.9		317	558.6887	597.797	627.6868
NCI+CI		4801.85	5105	5575		6479.3	6606.375	7068.82	7422.262
Growth			6.3%	9.2%		16.2%	18.5%	7.0%	5.0%
Other Income/(NCI+CI)	8.0%	8.5%	6.8%	8.8%		10.5%	8.5%	8.5%	8.5%
Total Revenue	1612.8	1867.5	2223.5	2439.9		1428	2698.995	3073.1	3551.796

Segmental Share
	FY16	FY17	FY18	FY19	1H19	1H20	FY20	FY21	FY22
Annual Issuer Charges	39%	35%	30%	34%	32%	35%	38%	38%	38%
Transaction Charges	21%	21%	23%	20%	20%	17%	18%	19%	20%
IPO/Corporate Action	9%	11%	16%	10%	12%	9%	8%	7%	8%
Online data Charges	13%	13%	16%	16%	17%	14%	14%	13%	12%
Others	19%	19%	16%	19%	18%	25%	22%	22%	22%
Total Revenue(Exc OI)	1228	1459	1877	1948	985	1111	2140.306	2475.31	2924.109

VALUATION CALCULATION
Particulars	FY16	FY17	FY18	FY19	1H19	1H20	FY20	FY21	FY22
Total Revenue	1612.8	1867.5	2223.5	2439.9		1428	2712.369	3087.41	3566.821
Employee cost % of TR	13.3%	13.3%	13.6%	14.0%		17.9%	17.93%	18.3%	19%
Other cost% of TR	25.7%	24.3%	24.3%	25.0%		32%	32%	33%	34%
EBITDA margin	63%	64%	67%	65%		55%	54.6%	52.7%	51.4%
EBITDA	1024	1202.6	1483.7	1581.3		788.7	1479.874	1627.07	1833.346
Depreciation % Revenue	2.6%	2.0%	3.1%	4.1%		4.0%	4.0%	4.0%	4.0%
Depreciation	41.90	37.00	69.50	99.20		56.70	108.49	123.50	142.67
EBIT/PBT	982.10	1165.60	1414.20	1482.10		732.00	1371.38	1503.57	1690.67
Tax rate						0.2217	23%	23%	23%
PAT	911.3	865.9	1036.4	1135.1		569.7	1055.962	1157.75	1301.818
PAT Margin	56.5%	46.4%	46.6%	46.5%		39.9%	0.389314	0.37499	0.36498
EPS	8.21	8.21	9.87	10.86			10.1049	11.0789	12.45759
MP on PE basis			283	235					261.6094
PE(on basis of PE)			28.672746	21.639					21
Book Value		5330	5980	6680			7334.697	8052.5	8859.629
BV pe share		51.00478	57.22488	63.9234			70.18848	77.0574	84.78114
Dividend			386.4	435.1			401.2657	439.945	494.691
Dividend %			37.3%	38.3%			38%	38%	38%
P/BV			4.95	3.68					3.2
MP based on P/BV									271.2996
Enterprise value			29163	24002.5					27500.19
EV/EBITDA			19.655591	15.179					15
MP based on EV/EBITDA									257.8966

• CDSL Offers great investment opportunity.
• Valuation are taken at low multiples taking conservative view while i personally believe such a company could be valued at high multiple which will unlock great upside.
• Risk of any Technological advancement such as block chain although that threat is very rare possibility especially in coming future.
• Or if economy goes down with grave recession which is also seems less probable due to the agile steps by government.

Conservatively also i feel 257-270 is the minimum range one can expect.

DISCLAIMER:Research has been done purely out of authors passion for equity research with the information available at public domain not representing any view of any organisation in any way. Analyst is not responsible for any losses and every investor is advised to invest only after careful research of his/her own or seek professional help for the same