CDSL IPO

Markets regulator Sebi on Friday imposed a penalty of Rs 1 crore on Central Depository Services (India) Ltd (CDSL) for multiple compliance lapses, including failure to communicate reasons for rejection of pledge requests to the depository participants (DPs) of both the pledgor and pledgee and shortcomings in disaster recovery drills. CDSL has been directed to pay the penalty within 45 days, failing which recovery proceedings may be initiated. In its 102-page order, Sebi said CDSL had violated several regulatory requirements during FY2023-24, following an inspection of its operations. The violations included failure to communicate reasons for rejection of pledge requests to the depository participants of both the pledgor and pledgee, non-compliance with prescribed procedures for handling Client Unpaid Securities Accounts (CUSA), inadequate measures to prevent unauthorised data transmission and shortcomings in disaster recovery operations. The regulator also found that CDSL had faile

The Sebi nod for the NSDL IPO came more than a year after the company submitted its DRHP to Sebi on July 7, 2023

CDSL is the country's largest depository in terms of the number of demat accounts handled

The price band for the CDSL IPO was Rs 145 to Rs 149 per share

Consolidated sales were up 19% to Rs 146 crore and operating profit margins increased to 54.4%

The IPO has so far received bids for 51 million shares for the 24.8 million shares on offer

The price band for the share sale has been fixed at Rs 145-149

CDSL is the second largest depository in terms of market share

2016 saw hectic fund-raising activity in the IPO segment as 26 firms collected over Rs 26,000 cr

Bourse will deploy proceeds in new ventures; revenue and margins may dip

High operating profit margins, stable revenue streams along with addition of new growth avenues strengthen the prospects of India's second largest depository - Central Depository Services (CDSL). Promoted by BSE, the company is looking to raise up to ~524 crore through its initial public offering (IPO) slated to open for subscription on June 19. The depository, which holds securities in an electronic form, operates in an industry with high entry barriers and has limited capex requirements going forward. Large part of its costs are towards technology upgradations and employee-related expenses, which are more or less fixed. With stable revenues and addition of new income streams, the benefits of scale will enable the company to maintain its high margins. At the upper price band of ~149 per share and assuming a 15 per cent growth, the issue is priced at 16 times of the FY18 earnings, which is not expensive considering the strong prospects. There are no listed peers for CDSL. CDSL has ...