CDSL Shares up 7%. Should You Buy?

Shares of Central Depository Services Limited (CDSL) have caught the attention of many investors as the stock is currently trading at ₹1,843.65 a gain of 7.28%. As of 11:05 am, the market capitalisation of the stock currently stands at ₹384.07 billion.

Overview

With a market capitalisation of around ₹37,516 crores and an enterprise value of ₹37,275.47 crores, the company has a P/E ratio of 81.21 and a P/B ratio of 24.22. While clocking a profit growth at 33.53%, the EPS (Earnings Per Share) is at ₹21.99. Interestingly, the cash reserves of the service provider is valued at ₹44.62 crore with zero debt.

Should you buy it?

Q2 earnings - CDSL reported a net profit of ₹162 crore, a jump of 48% on a year-on-year (YoY) basis. Moreover, revenue zoomed past 55.5% to ₹322.3 crore as against ₹207.3 crore in the corresponding period last year.

Market Expansion: The company is planning to expand its operations to include new digital offerings

What do brokerages recommend?

Motilal Oswal

By noting growth in increased transactions and expansion in digital services, it has given a ‘buy’ recommendation by setting a target price of ₹1,900, while maintaining a stop loss of ₹1,700.

ICICI Securities

The company expressed concerns over its high valuation, but acknowledged long-term growth. It has recommended to hold the stock by setting a target price of ₹1,850, thereby pegging a stop loss of ₹1,680.

HDFC Securities

The broker cautioned the current valuation, but recommended long-term investors to hold the shares. Though, it didn’t state a target price, but it suggested a stop loss at ₹1,700.