CDSL IPO valuations attractive on stable earnings, parentage, say analysts

CDSL IPO valuations attractive on stable earnings, parentage, say analysts

The Central Depository Services Ltd (CDSL), one of the two depositories in India, saw its initial public offering (IPO) oversubscribed almost 1.01 times today, its first day of issue.

CDSL is the second largest depository in terms of market share and has been growing at decent CAGR of 23% and 14% in 3 to 5 years.

Up to 7,00,000 shares are reserved for employees. The IPO will close two days later.

Limited on Monday, opened its Initial Public Offering (IPO) worth Rs 524 crore.

The public offering of 24.83 million shares – excluding the anchor investors’ portion – received bids for almost 28.75 million, or 1.16 times, stock-exchange data showed in the afternoon.

The price band for the share sale has been fixed at Rs145-149.

CDSL’s IPO, the first by a securities depository firm in India, comprises only an offer for sale by its shareholders, including BSE, State Bank of India, Bank of Baroda and Calcutta Stock Exchange. CDSL has a market share of 43 per cent in cumulative demat accounts.

However, CDSL received bids for 2,61,69,500 shares against the issue size of 2,48,27,046 shares.

Under the regulations, a stock exchange can not have more than 24 per cent in a depository.

CDSL has raised Rs 154.06 crore from anchor investors by selling 1.03 crore shares.

Consolidated sales were up 19% to Rs 146 crore and the operating profit margins increased from 52% to 54.4%, resulting in a 24% spurt in operating profit to Rs 79.42 crore in FY2017.