CDSL's Rs 524-cr IPO a massive hit; gets oversubscribed 170 times

The Rs 525-crore Initial Public Offer (IPO) of Central Depository Services (CDSL) saw a whopping 170 times more demand than shares on offer. The issue generated demand worth nearly Rs 63,000 crore. The issue was one of the most oversubscribed in recent times. Recent IPOs such as Avenue Supermarts, operator of DMart Chain, was subscribed 104 times, while that of state-owned Hudco saw nearly 80 times subscription.

Market players said in CDLS’s stable earnings growth, attractive valuations and return on equity attracted lot of investors towards the IPO, which saw nearly 1.8 million applications.

The institutional investor portion of the IPO was subscribed 149 times, high net worth individual (HNI) portion was subscribed 563 times and the retail portion was subscribed 23 times.

The high demand in the HNI segment was on expectations of high listing day gains, said brokers. Notably, most of the recent IPOs, such as Tejas Networks and Eris Lifesciences, were shunned by HNIs.

The price band for the CDSL IPO was Rs 145 to Rs 149 per share. At the top-end of the price band, CDSL will be valued at around Rs 1,550 crore. For the year FY17, CDSL had reported the net profit of Rs 85.8 crore on revenues of Rs 186.9 crore. At the IPO price, the company was valued at around 17.5 times its FY17 earnings.

Set up in 1999, CDSL is among the only two depositories in the country along with the National Securities Depository (NSDL). Both CDSL and NSDL facilitate holding of securities in electronic (dematerialised) format. As of March 2017, CDSL managed 12.3 million demat accounts, while NDSL handled 15.6 million. CDSL charges annual issuer fees for holding of securities in electronic form. Besides, it also generates revenues from other services such as electronic voting, documents storage, processing of know your customer (KYC) applications, processing fees for corporate actions like dividend payout and buybacks.

After BSE, CDSL is the second market infrastructure institution (MII) to go public. Just like the BSE, CDSL, too, will be listed only on the National Stock Exchange (NSE).