Reduce Central Depository Services, target price Rs 1160: ICICI Securities

ICICI Securities has reduce call on Central Depository Services (India) Ltd. with a target price of Rs 1160. The current market price of Central Depository Services (India) Ltd. is Rs 1375.

Time period given by analyst is one year when Central Depository Services (India) Ltd. price can reach defined target.
Central Depository Services (India) Ltd., incorporated in the year 1997, is a Small Cap company (having a market cap of Rs 14400.10 Crore) operating in Financial Services sector.


Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 110.25 Crore, up 6.83 % from last quarter Total Income of Rs 103.20 Crore and up 51.08 % from last year same quarter Total Income of Rs 72.98 Crore. Company reported net profit after tax of Rs 51.64 Crore in latest quarter.

Investment Rationale
The brokerage expects a revenue CAGR of 25% between FY21-FY23E driven by strong growth in market linked revenues (29% CAGR during the period). The brokerage expects non-market linked revenues to clock an 18% CAGR across the same timeline. Within market linked revenues, it expects transaction revenues to witness a strong CAGR of 33%. It also estimates IPO / Corporate action and Online data charges to grow at 27% / 25% CAGR on the back of continued retail participation in capital markets in the medium term. Within non-market linked revenues, it expects annual issuer charges to rise at 13% CAGR between FY21-FY23E. It also forecasts operating leverage benefits to accrue resulting in margin expansion from 61.6% in FY21 to 67% in FY22, and 69% in FY23. It values CDSL at 40x core EPS of Rs25.7 and free cash of Rs136/share to arrive at a target price of Rs1,160.

Promoter/FII Holdings
Promoters held 20 per cent stake in the company as of June 30, 2021, while FIIs held 9 per cent, DIIs 32.4 per cent and public and others 38.6 per cent.