CDSL growth is expected to resume led by a recovery in market-linked revenue (transaction, IPO, and KYC) and a strong annuity stream (annual issuer charges and e-CAS). Incremental revenue from compulsory Demat of new insurance policies (effective April 2024) and unlisted companies (Private Ltd) will provide a growth push in FY25E. The BO account addition is the core building block of the depository business and continued strong additions will support growth. CDSL added ~33mn accounts in FY24 (~0.13mn accounts every day) registering a growth of +39% YoY. It has a 76% BO market share with an 88% incremental share. We expect CDSL growth to be supported by (1) strong BO account additions, (2) traction in market-linked revenue, (3) a stable annuity revenue stream, and (4) contribution from CIRL. The insurance segment will contribute revenue of INR 0.31/0.35bn in FY25/26E assuming a 10/15% market share. We increase our EPS estimate by ~7/9% for FY25/26E, implying revenue/EBITDA/APAT CAGR of 21/24/23% over FY24-26E. We maintain our BUY rating and assign a TP of INR 2,360, based on 40x FY26E EPS. The stock has traded at an average 3Y/5Y 1-year forward P/E multiple of 42/35x. CDSL has a RoE of 32%, RoIC of 82%, 5Y average cash conversion is >80%, and net cash is ~6% of the market cap.
