Positive Triggers for CDSL in Longer Term:
As per the newspaper article there are 13.5 lakh unlisted private companies whose shares are to be dematerialized by September 2024. As per CDSL minimum charge for dematerializing is Rs 5000. Currently, CDSL has 35-40% Market share in dematerializing unlisted private companies. If CDSL maintains the same Market share and if this rule gets implemented, CDSL may generate an extra revenue of Rs 236.25 crores per year (13500000.355000). Further this revenue will not be market linked and hence will provide sustained revenue during Bear phase.
Further, more and more retail people are coming to capital market. This will lead to increase in number of folio’s which in turn will lead to increase in annual issuer charges from each listed company.
In KYC business CDSL have 65% Market share and 6.1 crore records which is a huge database. For every fetch they are getting Rs 35. Along with brokers and Mutual fund Houses, Account aggregators may fetch lot of information from CDSL in the future, which will increase revenue generating opportunities for CDSL.
In total number of demat accounts they have a market share of 74% which is continuously increasing due to their association with discount brokers (Zerodha, Angelone, etc). As more and more youth population are opening accounts with discount brokers, there is multi-decadal revenue opportunities for CDSL as people most often don’t switch brokers and brokers also don’t switch depositories due to switching costs.
E-voting and E-AGMs are new trends and these will continue to increase with each passing day and these will increase revenues for CDSL.
There is optionality in Insurance depository business. In future if its made mandatory, then it may create new revenue generating opportunities.
Invested and biased
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