https://www1.nseindia.com/corporate/CDSL_02092020164843_PressRelease.pdf
Disc - Invested
2 Likes
Interestingly India has only about 1.5 Crore actual Income tax payers! The latest figures from CDSL reveals two facts:
- Zerodha is growing its customer base on a at a pace it never witnessed before - note that all Zerodha account holders need to open demat account with CDSL.
- A large number of India’s lower middle income group(and the ones earning from from agriculture) is attracted to stock market.
What does this lead to?
a. Formalization of Indian economy at absolutely unprecedented pace.
b. The individual income tax payer base to grow at rates never witnessed before.
c. Institutions which are focused on digitization, money management, advisory and fin-tech could well witness frantic growth. NSE/BSE/MCX/NSDL/CDSL and all players in the money market could witness secular growth over the next few years and the best among them could well go on to become global leaders.
The negative impact is that we could well witness a good number of individual bankruptcies with in a very short period of time.
What should investors do?
Be disciplined, do your research and don’t pay heed on rumors.
Disclosure: Invested in CDSL from lower levels.
AJ
3 Likes
One more interesting point which will help CDSL in current context is the new SEBI norms on pledging the shares for fulfilling margin requirement.
As many of you have posted on this thread, below is the new norm on pledge and re-pledge system.
https://www.sebi.gov.in/legal/circulars/feb-2020/margin-obligations-to-be-given-by-way-of-pledge-re-pledge-in-the-depository-system_46082.html
The major implication is that earlier brokers with PoA could sell margin shares when required and MTM losses are near/exceed risk limits.
Now, these will need to be formally pledged with likes of CDSL and NSDL. These players charge small fees and this will be another booster for bottom-line.
Although they have reduced fees by 91% on this but the volumes will be huge for this process.
Disclosure: Tracking; Only for educational purpose only
9 Likes
Recently I have read that “CVLKRA was the first central-KYC (cKYC) Registration Agency”. (See website, https://www.fincash.com/l/kra-kyc-registration-agency)
Now as far as I understand ckyc was threat for the companies like CDSL, however reading the above mentioned thing I am not able to connect the dots. I have two questions, 1. Is ckyc still a threat for CDSL? 2. What is the meaning of above quoted sentence and how being ckyc registration agency going to help CDSL?.
2 Likes
Results update:
Results - H1
Topline growth is robust as expected, but the profitability is affected on account of significant jump in other expenses - can anyone ask the reason for this during the concall?
Thanks,
AJ
Disclosure: Invested.
Excerpt on “other expenses” from the conf. call -
Question: My question was on other expenses. So from your presentation where you are giving the various heads of expenses, the tech expense is up sequentially by I think 20%, more than 20% and same is admin and other expenses. So can you just explain this cost items? Are they linked to some revenue sources?
Response Yes. So I think as I said earlier, our entire depository operation is going to be based on enhancing our sophistication in basically IT and technology. So there is going to be a constant endeavor to ensure that our platforms become easy to use and therefore that is going to translate into some amount of the expense being spent on the software, hardware as well as basically the applications which we have and that is why there is an increase and it is done in a manner so that it will give a long-term play in terms of ensuring the ease of the operation. As well as the admin cost includes also some of basically the SMSes, which we are required to send, these are the new kinds of platforms which are going to come up and SEBI has asked both the depository to send basically the SMS for each transaction which is going to be done and now is being mandatorily done through this particular system, so that has caused a slight increase in terms of the admin cost.
5 Likes
Exerpts from SEBI Discussion paper:
The Indian securities market has witnessed dominance in trading and depository space, raising concerns on the possibility of excessive concentration and institutional tardiness in quickly responding to the changing market dynamics which may have an adverse bearing on efficiency in trading, record-keeping, supervision and risk management practices,"
The regulator said that another dominant trend shaping the exchange and depository landscape is the emergence of new technologies such as distributed ledger technology, artificial intelligence and machine learning.
“Several new fintech or techfin players have emerged in trading space in various jurisdictions, who are increasingly deploying these disruptive technologies and challenging the traditional functioning of stock exchanges and depositories (collectively termed as market infrastructure institutions, or MIIs)," said Sebi.
2 Likes
The secular growth story is continuing as expected. See the results for Q3 here.
The press release states that “During the last three months, the number of new active Beneficial Owners accounts with CDSL has increased by 28 lakhs taking the total number of active beneficial to 2.89 crores.”
AJ
Disclosure: Invested
Anil Singhvi from Zee Business says flurry of new IPOs including the much anticipated LIC IPO will be a growth driver for CDSL. Read on!
Thanks!
2 Likes
If I remember correctly, IPO/Corporate action charges consists only 10% of revenue. Even if this increases by 20-30% to ~12-13% of total revenue, it is very small delta.
On the other hand ancillary charges like pledging, transaction charges consists of ~30% of total revenue is where needle is moving. Plus incremental demat accounts by low cost brokers are opening with CDSL.
In the times of frenzy media generally justifies anything and everything 
7 Likes
I think you read it wrong here…Here it is talking about new demat accounts that will be opened due LIC ipo as 10% of the issue is reserved for LIC policyholders.
2 Likes
Right but those fresh issues are going to keep changing hands / ownership. Especially, PSU disinvestment stocks volumes will be massive, I suppose.
There is another news on rounds that LIC policyholder will get shares allotted - I doubt if that is going to really happen.
It is already confirmed - the proposal has been included in the Finance Bill 2021-22 as part of the Union Budget.
1 Like
https://www.cdslindia.com/Downloads/About/Media/CDSL_IFSC_Foreign%20Depository%20(004).pdf
Could someone please explain this line of business ?
This would facilitate holding and transfer of all the eligible securities which are permitted at the International Financial Services Centre (IFSC), Gujarat International Finance Tec (GIFT) city.
5 Likes
Some questions on my mind, How different is CVL different from RTA’s that CAMS offer for MF. What % of CDSL income is from RTA of MF and non MF? What % of CDSL total income is from Depository related activities?
How is the choice between NSDL & CDSL made ? Who decides it, broker or the corporate?
CVL predominantly offers central KYC service, They have RTA license and as of now CVL does not have any MF AMC’s with them. They do not store folios of mutual funds, which RTA like CAMS does. But they work lot like linkintime
Choice is selected by the broker, so far the trend is, retail focused brokers are choose CDSL and institutional and promotor groups are choosing NSDL
1 Like
A pandemic proof stock and a beneficiary of the rising financialization trend, the last year has been an eye opener of how fast CDSL is increasing the number of active users. This trend is likely to continue over the next decade as more new retail investors come to the equity markets and most of the growth gets captured by discount brokers that use CDSL.
Invested
7 Likes
CDSL Q4 2021 results highlights
- Revenue at Rs.110.25 Crores up 51% YoY
- Profit at Rs.51.64 Crores up 84%YoY
- Strong free cash flow growth of 138% YoY.
- 1.23 Crore new active accounts were opened and thereby taking the count to 3.34 crore active accounts as on 31st March 2021
- Final dividend of Rs.9 per share.
https://archives.nseindia.com/corporate/CDSL_01052021151237_PRforNSE.pdf
5 Likes
Recent data released on new account opening shows majority of discount brokers having huge market share and number going all time high. This should benefit CDSL. Also, since lockdown is again back with WFH likely to continue for few more months, trend seems to be to be ongoing in favour of these players.
4 Likes