CDSL Stock Rating: Brokerage upgrades to ‘Buy’, expects solid growth recovery; check target price HDFC Securities has upgraded its rating to ‘BUY’ on the Central Depository Services (India) stock, in a research note citing several favourable factors including high annuity revenue, recovery in market-linked revenue, and Insurance opportunity. “We upgrade our rating to ‘BUY’ from ‘ADD’ and assign a Target Price of Rs 1,470, based on 37x June-25E EPS,” said the report. The report pointed out that although the company’s growth rate in FY23 was flat mostly because of a decline in the market-linked revenue by 17%, it is expected to restore the solid growth that it had registered in FY21-22 (>50% YoY in FY21-22, driven by ~4/4x rise in transaction revenue/Demat accounts). Additionally, a higher transaction revenue driven by growth in delivery volume, and the continuity of growth in the annuity revenue stream, are some of the factors that are going to boost its growth rate in FY24. The Insurance Regulatory and Development Authority of India (IRDAI) has mandated the dematerialisation of all insurance policies by December 2023. This is expected to open fresh opportunities to CDSL and other IRDA-registered insurance repositories including NDML, CAMS, KARVY, and CIRL. The report expected this regulatory push to contribute up to 7% to the CDSL’s revenue. “Currently, only 2% of the policies are in demat form, and as per our estimate, the total recurring opportunity for repositories will be ~INR 1.52bn. CDSL can generate additional revenue of INR 0.38bn, assuming a 25% market share, which is ~7% of FY23 revenue,” said the report. CDSL’s market cap stands at Rs 12,665.40 crore, the P/E ratio is 45.90, and the dividend yield is 1.32 %. The prices for the 52-week high were at Rs 1451.90 on September 8, 2022, whereas the 52-week low fell to Rs 880.90 on March 8, 2023. CDSL’S share price has gained 2.2% in the last one week and surged 18.8% in the last one month. It has jumped 11.8% in the last six months and has gained nearly 10% in the last one year.
Last Friday, WTI and Brent slid 3% after strong U.S. jobs data raised concerns that the Federal Reserve would keep raising interest rates, which in turn boosted the dollar. While recession fears dominated the market last week, on Sunday International Energy Agency (IEA) Executive Director Fatih Birol highlighted that China’s recovery remains a key driver for oil prices.
“If demand goes up very strongly, if the Chinese economy rebounds, then there will be a need, in my view, for the OPEC+ countries to look at their (output) policies,” Birol told Reuters on the sidelines of a conference in India.Price caps on Russian products took effect on Sunday, with the Group of Seven (G7), the European Union and Australia agreeing on caps of $100 per barrel on diesel and other products that trade at a premium to crude, and $45 per barrel for products that trade at a discount, such as fuel oil.
“For the moment, the market expects non-EU countries will increase imports of refined Russian crude, thus creating little disruption to overall supplies,” ANZ analysts said in a client note. “Nevertheless, OPEC’s continued constraint on supply should keep the market tight,” they said.