Central Depository Services Ltd - IPO Note - Angel Broking

Views of Mr. Siddharth Purohit (Sr. Equity Research Analyst- Banking, Angel Broking):

Central Depository Services Ltd (CDSL) is one of the two depositories operating in India, which facilitate the holding of securities in electronic form and enable securities to be processed by book entry. It was originally promoted by BSE, which subsequently divested part of its stake to leading banks as its sponsors.

Outlook & Valuation: CDSL has a unique business model with high entry barriers coupled with decent growth prospects. The average ROE for the last six years has been ~17%, which we believe will sustain going ahead as well. The incremental capital required for doing business in this space is very minimal and this makes it an interesting business model. At the issue price band of Rs. 145-149, the stock is offered at 17.7x-18.2x its FY2017 EPS, which we believe is reasonably priced, and hence, recommend SUBSRIBE to the issue.

Source : Equity Bulls

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