CDSL Share Price Declines 9% Following Q3 Results Despite 21.11% Rise in Consolidated Net Profit

5 Dariya News

27-Jan-2025

Central Depository Services Limited's or CDSL December 2024 quarter financial results saw a 21.11% rise in consolidated net profit. However this good growth was overshadowed by a sharp decline in the company's share price, which fell 9% on January 27, 2025, after the announcement of these figures.

Financial Performance Overview

CDSL's consolidated net profit increased significantly to ₹105 crore in the December quarter compared to the previous year. Given the competitive environment and general market conditions, this increase is very remarkable. Despite this increase in net profit, according to several key financial indicators, the corporation faced difficulties.

CDSL's operating income declined to ₹221 crore from ₹248 crore in the same quarter last year. Further, the company's EBITDA (earnings before interest, tax, depreciation and amortization) fell sharply by 37% to ₹146 crore from ₹231 crore in the September quarter. The operational difficulties, which may have raised investors' apprehensions, are reflected in this decline in EBITDA.

The decline in New Accounts and Demat Custody

The steep fall in the number of new demat accounts opened during the quarter is one of the most worrying factors mentioned in CDSL's quarterly report. Only 92 lakh new accounts were registered by the corporation, a steep drop from the 1.18 crore accounts opened in the previous quarter.

This is the lowest number of new accounts opened since the December quarter of FY 2024. In addition, CDSL's demat custody has also declined, falling to ₹75 lakh crore from ₹78 lakh crore in September. For a business that primarily acts as a depository, this decline raises concerns about market activity and investor participation.

Market Reaction and Analyst Ratings

The market reaction to CDSL's quarterly results was swift and harsh; following the release, the stock fell nearly 30% from its most recent top of ₹1,989 to around ₹1,381.8. Of the ten analysts following CDSL stock, six have kept their rating at "hold", two have recommended "buy", and two have recommended "sell". Analysts' ambivalence about CDSL's near-term success in the face of deteriorating operational measures is reflected in this mixed opinion.

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