1:1 Bonus Shares Alert: Multibagger Depository Stock to Trade Ex-Bonus Soon

Dalal Street has witnessed a fascinating trend in 2024; a surge in companies issuing bonus shares, with over 75 companies showering their investors with this perk so far this year.

This surge marks a shift in the investment landscape, where investors prioritise companies that actively reward their shareholders beyond just stock price appreciation.

For these investors, bonus shares hold significant appeal. These free shares essentially act like a stock dividend, multiplying existing holdings and boosting the overall share count without impacting the company's core value.

This translates to potentially improved liquidity of the stock and is a signal of confidence in the company's future.

For investors seeking such perks, the monopoly stock, CDSL, is slated to trade ex-bonus soon.

Here's all you need to know...

• CDSL, via a press release dated 2 July 2024, announced a bonus issue of shares.
• The company is set to issue bonus shares in a ratio of 1:1. This means one new fully paid bonus equity share of Rs 10 each for each fully paid equity share of Rs 10 each held as of the record date.
• The company has fixed Saturday, 24 August 2024, as the record date for ascertaining the eligibility of shareholders for the bonus issue.

This is the first time the company has announced a bonus. Before this, the company has not carried out any major corporate actions.

IIBHL Investment Boost

CDSL recently announced that SEBI has approved an additional investment of up to Rs 200 m in India International Bullion Holding IFSC Limited (IIBHL).

This investment aims to maintain the required net worth for India International Bullion Exchange IFSC Limited (IIBX) as stipulated by the International Financial Services Centres Authority (IFSCA).

The IIBHL board has resolved that any necessary investment in IIBX will be provided by IIBHL, including contributions from any consortium member of IIBHL.

The acquisition process for IIBHL is expected to be completed by 31 August 2024.

IIBHL, a holding company for the Bullion Project, is funding its two subsidiaries: India International Bullion Exchange IFSC, which provides a bullion importing platform, and India International Depository IFSC, responsible for depository functions.

A Close Look at the Financials

CDSL's financial performance from FY22 to FY24 demonstrates a solid growth trajectory with significant revenue and profit improvements in FY24. The revenue achieved a compound annualised growth rate (CAGR) of 21%.

CDSL's revenue grew significantly in FY24, reaching Rs 8,123 million (m), a 46.3% increase from FY23. This marks a substantial rebound from the minimal 0.7% growth in the previous year.

Net profit figures have shown variability over the last three years. In FY22, CDSL reported a net profit of Rs 3,118 m, which decreased to Rs 2,760 m in FY23. Despite this dip, the company rebounded strongly in FY24, achieving a net profit of Rs 4,196 m.

Over the past three years, the company's net profit grew at a CAGR of 16%.

CDSL Snapshot (FY22-24)

(Rs m, Consolidated)	FY22	FY23	FY24
Operational Revenue	5,513.00	5,551.00	8,123.00
Growth (%)	60.4	0.7	46.3
Net Profit	3,118.00	2,760.00	4,196.00
Net Profit Margin (%)	56.6	49.7	51.7

Source: Equitymaster

What Next?

With increasing retail participation in the Indian equity markets, CDSL has successfully expanded its market share to 76%, up from 48% six years ago.

The company aims to further bolster this position by focusing on expanding its market presence and increasing annuity income.

CDSL plans to enhance its outreach through targeted investor awareness campaigns designed to educate and empower new investors, helping them become self-sufficient in their investment journeys.

The company is committed to building long-term relationships with its depository participants (DPs) and other market stakeholders, positioning itself as a preferred choice in the industry.

Additionally, CDSL intends to invest resources in researching and improving cybersecurity measures.

The company will also prioritise promoting digital onboarding and paperless processes to cut operational costs and reduce its environmental footprint.

How Shares of CDSL have Performed Recently

The share price of CDSL has surged 35.1% in the past six months.

Over the past one year, shares of the company have rallied 117%. In 2024, the share price of the company is up 41% so far.

The stock touched its 52-week high of Rs 2,667.9 on 12 August 2024 and its 52-week low of Rs 1,105 on 1 September 2023.

About CDSL

Central Depository Services (India) Limited (CDSL) is one of India's leading securities depositories. It's the only listed depository in India and a beneficiary of the structural growth in the capital markets.

There are only two depositories in India, the other being NSDL which is not listed yet.

As a securities depository, CDSL facilitates the holding of securities in digital form and enables securities transactions (including off-market transfers and pledges) to be processed by book entry.

It generates income from annual issuer charges (annuity income), transaction charges which is market dependent, IPO/corporate activity charges, online data charges through its subsidiary CDSL Ventures, and others.

The company has high stability of operating income from the fixed annual charges collected from the registered companies and transaction-based fees collected from Depository Participants.

For more details, you can have a look at the?CDSL company fact sheet?and?quarterly results?on our website.

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