Why CDSL Share Price is Falling

On Monday, 28 July 2025, the Indian stock markets are showing weakness with some volatility.

At the time of writing, the NSE Nifty has fallen 170 points to 24,667 points. The BSE Sensex has dropped 609 points in trade at 80,858 points.

Kotak Bank is the top loser from the NSE Nifty falling as much as 7%. There is caution among investors ahead of tariff deadlines this week and ongoing uncertainty from India-US trade negotiations. The recent corporate earnings have also contributed to the subdued market sentiment.

One stock that has fallen sharply today is Central Depository Services (India) Ltd (CDSL).

Why is CDSL Falling?

#1 Disappointing Results

The company's revenue growth was almost stagnant at 0.6% YoY. It grew to Rs 2,596.4 million (m) from Rs 2,574 m a year ago.

Expenses rose sharply by 27.35%, leading to a contraction in EBITDA margins from 60% to 50.4% YoY.

CDSL also reported a 23.6% YoY decline in net profit to Rs 1,024 m, the second consecutive quarter of profit decline. Rising costs and margin pressures have hurt profitability, denting investor sentiment.

#2 Upcoming NSDL IPO

Investor focus has shifted ahead of the IPO of CDSL's main rival, National Securities Depository Limited (NSDL), scheduled to open on 30 July 2025.

NSDL is the country's largest depository (in terms of value of securities held). Investors will now have another option if they want to buy shares of a depository.

This shift in investors' attention has led to share price pressure on CDSL.

#3 Slower Growth in New Demat Accounts

A slowdown in new demat account openings and flat to declining demat custody values have raised concerns about future growth prospects, impacting investor confidence. This declining trend was notable during the quarter.

What Next for CDSL?

Margin pressures due to rising expenses led to a 23.6% YoY profit decline in the quarter.

New accounts being opened shows a declining trend over the last few quarters. While 9.9 m new accounts were opened in Q1 FY25, in Q1 FY26 there were only 5.7 m new accounts opened.

CDSL's growth is directly aligned with expanding Indian capital markets. Over the last few years, we have seen solid robust capital growth. This has slowed in terms of new broking accounts and demat accounts being opened.

In response to current challenges, CDSL is expected to maintain operational efficiency, invest in technology, and leverage its large network of depository participants to sustain growth.

The duopoly nature of this business in India means competition is not very intense. This too augurs well for CDSL over the long term.

A significant part of the company's revenue comes from listed companies paying annual fees for managing their security electronically. This is a recurring revenue which is almost assured.

How Shares of CDSL have Performed Recently

Over the last one month, the share price of CDSL has lost close to 14% from levels of Rs 1,794 to the current levels of Rs 1,534. In past one year, shares of the company have gained 25%.

The stock hit a 52-week high of Rs 1,989.9 on 17 December 2024. The stock also hit a 52-week low of Rs 1,047.45 on 17 March 2025.

About CDSL

CDSL is one of India's top central securities depositories.

It serves as a digital vault facilitating the holding, transfer, and settlement of securities such as shares and bonds in electronic form, eliminating the need for physical certificates.

CDSL operates under the regulation of the Securities and Exchange Board of India (SEBI) and was initially promoted by the Bombay Stock Exchange (BSE).

As the largest depository in India by number of demat accounts, CDSL plays a crucial role in the Indian capital markets by enabling secure, efficient, and paperless trading of securities.

Investors access CDSL's services indirectly through authorised intermediaries known as Depository Participants (DPs), who provide demat accounts to investors.

To know more, check CDSL's fact sheet and latest quarterly results. You can also compare CDSL with its peers on our website.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...