CDSL Shares Drop Sharply: A Look at Q3 Performance

The Central Depository Services (India) Limited (CDSL) shares witnessed a significant dip, plunging 9.5% on January 27, 2025, following the announcement of its Q3 FY25 earnings. The results fell short of market expectations, leading to a sell-off in CDSL and other capital market stocks.

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Q3 FY25 Financial Highlights

  • Net Profit: Increased by 21.5% year-on-year (YoY) to ₹130 crore, compared to ₹107 crore in Q3 FY24.
  • Operating Income: Declined by 11% YoY, reaching ₹221 crore from ₹248 crore in the same quarter last year.
  • EBITDA: Fell by 37% sequentially, from ₹231 crore in Q2 FY25 to ₹146 crore in Q3 FY25.

Market Sentiment

Despite the YoY profit growth, the sequential decline in net profit and total income disappointed investors, resulting in a 9.5% intraday fall in the share price to ₹1,358.35 on the NSE.

Additionally, new demat account openings slowed significantly:

  • 92 lakh accounts in Q3 FY25, the lowest since Q4 FY24.
  • Down from 1.18 crore accounts in Q2 FY25.

Stock Performance vs. Nifty 50

  • CDSL: Dropped 14% in the last five trading days and 23% in the past month. Despite this, the stock has delivered 11.5% returns in six months and 55% in one year.
  • Nifty 50: Fell by 2% in the last five trading days and 4% in the past month, with an annual return of 5%.

Industry Impact and Outlook

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  • The weak Q3 performance of CDSL affected other market players like 360 One WAM and Angel One, with their shares dropping by 6% and 4%, respectively.
  • Analysts remain optimistic about CDSL’s long-term growth, citing investments in technology and human resources to improve EBITDA margins to 65% by FY27.

Conclusion

The CDSL Q3 earnings reveal a mixed performance, with sequential declines overshadowing YoY growth. While the short-term sentiment remains cautious, the company’s strategic investments hint at potential recovery in the coming quarters. Investors are advised to approach with prudence and monitor future developments.

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