ICICI Direct Recommends Buying Central Depository Services, Targets Rs 1180

Central Depository Services (CDSL) Research Report

Industry Overview Depositories remain a structural play on India's capital markets, driven by increasing retail participation and a mix of annuity and transaction-based business. This segment is characterized by a duopoly industry structure.

Key Strengths of CDSL

1. Market Leadership: CDSL boasts the highest number of demat accounts, with a market share of 80% as of February 2026.
2. Steady Non-Market-Linked Revenue: The company benefits from annuity issuer charges, corporate actions, and other steady revenue streams.
3. Market-Linked Revenue Segments: CDSL is gaining traction in cash delivery, company listings, and Know Your Customer (KYC) services.

Challenges and Outlook Continuous investments have led to a decline in margins, while rate cuts are likely to result in lower earnings growth for the KYC subsidiary. Despite these challenges, we maintain a HOLD rating for CDSL.

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Recommendation We revise our target price to INR 1,180, based on a 40x multiple of the company's estimated FY28E core EPS of INR 26.6.