Latest news with #CDSL
Mint
7 days ago
- Business
- Mint
BSE, CDSL share prices rebound after Sebi's clarification on options linkage
Shares of capital market-linked stocks BSE and Central Depository Services Limited (CDSL) rebounded after a sharp selloff in trade a day ago, after the market regulator clarified that it doesn't plan to link options leverage limits to cash positions. According to a Reuters report Securities and Exchange Board of India said there was "no proposal under consideration to link options leverage limits to cash positions". (This is a developing story)
Time of India
07-07-2025
- Business
- Time of India
'Don't see other risks, Sebi is upgrading surveillance': Chairman Tuhin Kanta Pandey
MUMBAI: Sebi chief Tuhin Kanta Pandey on Monday assured investors there were not many other risks in the market like the one seen recently in the event of market manipulation by US-based quant fund Jane Street. Tired of too many ads? go ad free now The Sebi chief also said that the Jane Street issue was more of a surveillance issue and that the regulator is in the process of upgrading now. The chairman of of the markets regulator was speaking to the media after inaugurating a new investor empowerment facility on the apps run by the two depositories, CDSL and NSDL. Late on Thursday Sebi through an enforcement order had temporarily banned Jane Street and three of its affiliates from the Indian market for manipulation in stocks and futures & options (F&O) markets. The regulator had also asked the entities to together disgorge nearly Rs 4,850 crore, alleged to be Jane Street's illegal gains. Asked if there were other similar funds that have manipulated the market, Sebi chief said he didn't think there were "very many other risks." Pandey said that what happened in the Jane Street matter was a surveillance issue, and the regulator was upgrading its surveillance systems. A day earlier, the markets regulator had said that along with Sebi, the two leading bourses were also in the process of upgrading their surveillance systems so that cases like Jane Street did not occur. He had also assured investors that Sebi will not tolerate any attempt at market manipulation. The Sebi chief also said that the action it took against Jane Street was within the confines of the regulatory powers. Pandey also said that was not the regulatory powers but better surveillance and enforcement systems which would act as deterrents against market manipulators.
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Business Standard
04-07-2025
- Business
- Business Standard
Jane Street crackdown: MIIs, brokerage shares fall on volume concerns
Among MIIs, shares of BSE fell around 6.5 per cent to Rs 2,639 per share, while CDSL declined by nearly 2.5 per cent on Friday, closing at Rs 1,763 apiece Khushboo Tiwari Mumbai Listen to This Article Shares of brokerages and market infrastructure institutions (MIIs) witnessed selling pressure on Friday after Sebi's crackdown on proprietary trading firm Jane Street. The weakness was attributed to concerns that debarment of the US firm — a prominent player in the futures and options (F&O) segment — will lead to a further decline in volumes, which are already down over 30 per cent from the peak. Among MIIs, shares of BSE fell around 6.5 per cent to Rs 2,639 per share, while CDSL declined by nearly 2.5 per cent on Friday, closing at Rs 1,763 apiece. Meanwhile, shares of Nuvama Wealth,
Indian Express
04-07-2025
- Business
- Indian Express
CDSL's bull run faces a margin crunch: Should investors worry?
Over the past few months, shares of India's second-largest depository have surged more than 80% from their March lows. That kind of rally usually follows blockbuster earnings or strong growth signals. But here's the twist. In reality, Central Depository Services Limited's (CDSL) fundamentals are weakening. In its Q4FY25 results, the company reported a decline in revenues, shrinking margins, and slowing account growth. And yet, the market seems unfazed. So what gives? To understand what's going on, let's start with a simple metaphor called The Restaurant Test. Think of a restaurant. Whether it serves 50 people in one night or 500, some costs do not change. These are called fixed costs, such as rent, kitchen equipment, salaries of chefs and permanent staff, electricity, etc. When the restaurant is full, these fixed costs get spread over a large number of customers. This means the cost per meal is low, and the restaurant makes more profit on each additional plate served. This is what people call operating leverage, working in your favour. Your profits grow faster than your sales once fixed costs are covered. But imagine the situation reverses. Suddenly, the restaurant only gets 50 customers a night. Even then, you still have to pay the same rent and salaries. You cannot send the chef home or switch off the kitchen just because fewer people came. The fixed costs now get divided among a smaller number of meals, so the cost per meal goes up, and your profit margin shrinks drastically. This is called operating leverage working against you. Small drops in sales can cause a big fall in profits because those unavoidable costs remain the same. That is, in my opinion, essentially what's happening to CDSL right now. For the uninitiated, CDSL is like a giant digital vault that holds all your stock certificates electronically. Every time you buy or sell shares, trade mutual funds, or participate in an IPO, CDSL (along with NSDL) facilitates these transactions. They're the invisible infrastructure that makes India's capital markets tick. And for the past few years, business has been booming. From FY22 to FY24, CDSL was living the dream. Revenue jumped from Rs 284 crore in FY20 to Rs 907 crore in FY24, and then to Rs 1,199 crore in FY25. The company was adding millions of new demat accounts every quarter. In total, close to 3.7 crore accounts were added in FY25 alone. Transaction volumes were through the roof as retail investors poured into the markets. This is where operating leverage becomes your best friend. CDSL's business model is beautifully simple: high fixed costs (technology infrastructure, security systems, staff) and low variable costs. When volumes explode, most of that additional revenue flows straight to the bottom line. Operating margins expanded from 40% in FY20 to over 60% in FY24. But then came Q4FY25, and the music stopped. Here's what happened in the fourth quarter that has analysts worried: But costs kept climbing: Operating expenses jumped 15% YoY to Rs 156 crore. Remember, CDSL has been investing heavily in technology, infrastructure, and human resources for 'future growth.' The result? Net profit margins collapsed from around 48% in Q4FY24 to around 39% in Q4FY25. That's close to 900 basis points (~9%) drop. This is operating leverage working in reverse. When volumes were growing, every additional transaction was almost pure profit. But when volumes decline, you're stuck with the same fixed costs while revenue shrinks. Think about it: CDSL still needs to maintain the same level of security infrastructure, whether they process 100 million transactions or 50 million. The data centres still need to run, the compliance costs remain, and the technology investments continue. The numbers tell the story: Total cost-to-income ratio jumped from 51% in Q4FY24 to 60% in Q4FY25 PAT margins compressed from 48% to 39% Despite revenue growth of 33% for the full year, Q4 showed how quickly things can turn But wait, there's more What makes this particularly painful is that CDSL has to keep investing. As management noted, they're continuing to invest in 'four key areas: hardware, infrastructure, application, and security.' This is the cost of staying relevant in a rapidly digitising financial ecosystem. They're also integrating with LIC, rolling out new features in their MyEasi app, and centralising KYC operations. These are good long-term moves, but they add to the fixed cost base when revenues are under pressure. Here's another twist: CDSL isn't just fighting market cyclicality; they're also in a duopoly with NSDL, which controls about 90% of the market. CDSL's growth has largely come from gaining market share and overall market expansion. But if the pie isn't growing and you're already the smaller player, growth becomes much harder. The company's revenue mix shows this challenge: Motilal Oswal has cut its earnings estimates by 15% for FY26 and 13% for FY27, citing 'slower account openings, weak cash volume trajectory, reduction in IPO actions, and continued investments.' They expect revenue/EBITDA/PAT to grow at just 12-13% CAGR over FY25-27, a far cry from the 30%+ growth rates of recent years. The stock is trading at 52x FY25 earnings, which looks expensive for a business facing cyclical headwinds and structural margin pressure from continued investments. India's capital markets are still in their infancy compared to developed markets. The financialisation of savings, the growth of digital transactions, and the expansion of the mutual fund industry all point to long-term tailwinds. But what Q4FY25 shows is that even the best infrastructure businesses aren't immune to cycles. The same operating leverage that made CDSL a darling during the bull run is now working against it. For investors, this is a reminder that in cyclical businesses, valuation matters. Paying premium multiples for even great businesses can be painful when the cycle turns, especially when those businesses have high fixed costs that don't adjust quickly to changing demand. CDSL's story isn't over, but it's a perfect case study of why understanding operating leverage works both ways. The key question now: How long before the traffic picks up again? Note: We have relied on data from the annual reports throughout this article. For forecasting, we have used our assumptions. Parth Parikh has over a decade of experience in finance and research, and he currently heads the growth and content vertical at Finsire. He holds an FRM Charter along with an MBA in Finance from Narsee Monjee Institute of Management Studies. Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
Mint
24-06-2025
- Business
- Mint
From BDL, BSE to Wockhardt— experts recommend 6 stocks to buy for short term after Trump announces Israel-Iran ceasefire
Stocks to buy for the short term: Major stock markets across the globe jumped with healthy gains on Tuesday after US President Donald Trump announced a ceasefire between Israel and Iran. Experts say with a major geopolitical headwind subsiding and in light of positive global cues, the Indian stock market benchmark, the Nifty 50, may see a fresh breakout to extend gains beyond 25,200. The Nifty 50 has been in a range for almost the entire month. A fresh spell of strong buying may make the index end the month with a healthy gain, extending the winning streak to four consecutive months. However, experts warn investors and traders should remain cautious as Trump's tariff-related uncertainty persists. They suggest investors focus on stocks with strong fundamentals and favourable technical indicators at this juncture. BDL is showing signs of a falling wedge breakout on the daily chart — a bullish pattern. The breakout is supported by a notable spike in volume, further validating the strength of this move. "A sustained close above ₹ 1,935 could lead to an upward rally toward ₹ 2,150 and ₹ 2,200. Immediate support lies at ₹ 1,900, making dips attractive for fresh entries. For effective risk management, a stop loss should be placed at ₹ 1,820," said Bhojane. BSE has recently shown a bullish reversal from the 20 EMA, forming a strong bullish candle backed by rising volumes — a positive sign for further upside. "A decisive close above ₹ 2,780 may open the way for targets of ₹ 3,100 and ₹ 3,200. Immediate support is seen near ₹ 2,680, offering a favourable entry on dips. To limit downside risk, a stop-loss is advised at ₹ 2,580," said Bhojane. CDSL has shown a bullish reversal by taking support at the 20 EMA on the daily chart. This upward move is supported by a significant rise in trading volume, indicating strong bullish momentum. The RSI at 64.34 indicates improving momentum. "A close above ₹ 1,750 would further confirm the breakout and strengthen the case for short-term targets of ₹ 1,900 and ₹ 1,950. On the downside, immediate support lies at ₹ 1,650, making dips a good buying opportunity. For risk management, a stop-loss should be placed at ₹ 1,630," Bhojane said. Jindal Stainless has registered a decisive breakout from an Inverse Head and Shoulders pattern, signalling a bullish trend reversal. The stock rebounded from the right shoulder region, affirming strong support at that level. It has maintained a higher high, higher low structure, and the breakout is accompanied by a notable surge in volume, indicating accumulation by market participants. The stock is trading above its key short-term exponential moving averages (21 & 55 EMA), reinforcing bullish momentum. An RSI of 67 and bullish MACD divergence further validate the strength, suggesting potential outperformance in the near term. Wockhardt has registered a fresh breakout from its consolidation phase, marked by a bullish Marubozu candle and a new all-time high. A successful retest and rebound from the breakout zone reinforce the breakout's credibility. The surge in volume confirms strong buying participation. The stock continues its structure of higher highs and higher lows, underscoring a sustained uptrend. Trading well above its 21- & 55-EMA, it reflects strong momentum. An RSI of 67 and bullish MACD crossover without overbought conditions further affirm strength, indicating potential for continued outperformance. Cummins India has given a breakout above a declining trendline, signalling a bullish trend reversal. The post-breakout retest of the trendline, which now coincides with the 21-EMA, has acted as strong support, reaffirming its significance. This breakout was supported by a sharp rise in volumes, indicating strong accumulation. The stock is trading above its key short-term EMAs (21 & 55), reflecting sustained bullish momentum. A golden crossover further reinforces the positive outlook. With RSI at 56 and bullish MACD crossover, the stock appears well-positioned for a continued upward trajectory. Read all market-related news here Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
