Broker’s call: CDSL (Buy)

Central Depository Services (CDSL) has shown signs of recovery following a sluggish fiscal year 26. Revenue growth slowed to 5.8 per cent year-over-year, and EBITDA margin contracted by 651 basis points to 51.2 per cent. However, two key challenges have now been overcome. Transaction charges and KYC fees were reduced, affecting blended realizations negatively by 8-10 per cent.

Furthermore, a significant increase in primary market activity has occurred, with 50 mainboard IPOs in Q2-FY27 compared to nine in Q1-FY27. BO account additions have also recovered to 1 lakh per day from a low of 70K per day in March 2026. We anticipate around 1 crore new accounts in Q2-FY27E, the highest quarterly addition in eight quarters.

This resurgence in accounts should boost transaction revenue, KYC revenue, and income from IPOs and corporate actions, which are all expected to recover. The widening issuer base will also contribute to annual issuer charge annuity. Despite underperforming over the past year, CDSL is currently priced at a 42x FY28E multiple, which is 7 per cent below its five-year average one-year forward P/E of 45x.

Consequently, we have upgraded CDSL to Buy and set a target price of ₹1,620, based on 45x Sep-28E EPS.