CDSL is the second largest depository in terms of market share
The initial public offer (IPO) of BSE-promoted Central Depository Services Limited (CDSL) opened today for subscription. The company is planning to raise up to Rs 524 crore through this maiden offer.
CDSL acts as a repository of over 325,000 e-insurance accounts, reports suggest, which hold more than 66,000 insurance policies in electronic form. It also offers other online services such as e-voting, e-Locker, National Academy Depository, electronic access to security information & execution of secured transactions, drafting & preparation of wills for succession, mobile applications and transactions using secured texting.
So, should you subscribe to the offer? Here’s what leading brokerages and research houses suggest:
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CDSL is the second largest depository in terms of market share and has been growing at decent compounded annual growth rate (CAGR) of 23%/14% in 3/5 years (and revenues grew by 13%/18%). Further, the key positive about the company is that it has controlled operating expenses in last 3 years which has led to significant margin expansion of 1150 bps since FY15 to 54% in FY17.
At the upper band of INR149, the offer is available at 18.2x FY17 EPS which we believe is attractive considering – 1) strong parentage and entry barrier 2) stable earnings growth 3) strong margins and 4) decent ROE of 16%. Hence we recommend to SUBSCRIBE for long-term investment….(read more…)