Company Update : CDSL Ltd By Motilal Oswal Financial Services Ltd
Miss on PAT due to lower-than-expected revenue growth
* CDSL’s operating revenue grew 30% YoY to INR2.8b (10% miss) in 3QFY25, driven by 27%/87% YoY growth in annual issuer charges/IPO charges. For 9MFY25, it grew 50% YoY to INR8.6b.
* EBITDA grew 22% YoY to INR1.6b (15% miss), resulting in EBITDA margin of 57.8% (vs. 61.3% in 3QFY24 and 62% in 2QFY25). For 9MFY25, it grew 51% YoY to INR5.1b.
* Operating expenses grew 41% YoY to INR1.2b, due to a 44%/36% YoY increase in other expenses/employee costs.
* Otherincome declined 7% YoY to INR200m (47% miss). For 9MFY25, it grew 25% YoY to INR858m.
* 3Q PAT grew 21% YoY to INR1.3b (20% miss). For 9MFY25, it grew 47% YoY to INR4.3b. PAT margins came in at 46.7% vs. 50.1% in 3QFY24 and 50.3% in 2QFY25.
Valuation and view
* Continued investments in human resources and technology for future growth could restrict gains from operating leverage, but we still expect EBITDA margins to expand to ~65% in FY27E from 60.3% in FY24. An assetlight business model and a healthy dividend payout ratio of 58% in FY27E will translate into RoE of ~41% in FY27E as compared to 31% in FY24.
* We estimate a CAGR of 31%/34%/32% in revenue/EBIDTA/PAT for CDSL over FY24-27E. We maintain our Neutral rating on CDSL with a one-year TP of INR1,900 (P/E multiple of 46x Sep’26E).
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