# CDSL: The Toll Booth on Every Indian Stock Market Transaction

> Every time you buy a share, CDSL earns. A thesis on whether India's sole listed depository is still a compounder at current valuations.

**Companies**: C D S L
**Sectors**: Capital Markets
**Published**: 2026-03-27
**Last Updated**: 2026-03-30
**Source**: https://thesisloop.ai/thesis/28420345-91d3-4b54-8eed-d1fdf330cc13

## Score Overview

| Company | Management | Business Model | Future Growth | Risk |
|---------|-----------|---------------|--------------|------|
| C D S L | 74/100 | 53/100 | 69/100 | 55/100 |

## C D S L (NSE:CDSL)

**Sector**: Capital Markets | **Industry**: Depositories, Clearing Houses and Other Intermediaries

### Management Credibility

- **[CATALYST] DEPA and Account Aggregator Linkage** (NEUTRAL): CDSL is monitoring the Account Aggregator framework and expects to see how it pans out as a Financial Information Provider (FIP) over the next few quarters. (+1 more commitment)
  > We have to wait and watch over the next few quarters to see how it really pans out.
- **[CATALYST] SEBI Cyber Resilience Requirements** (NEUTRAL): The company intends to maintain technology investments at a historical run rate of approximately 10% to 12% of revenue to ensure platform quality. — target: 10% to 12% of revenue (+1 more commitment)
  > But if you go by the past trend, they have been ranging in around that range about 10% to 12%, but I think the important thing is from an intent point of view. We would like to ensure that the platforms of CDSL have the best-in-class technology.
- **[CATALYST] Full Demat Mandate Expansion** (POSITIVE, MET): Management confirms they have built technology and human resources to handle the expected load, but notes that the actual volume depends on specific triggers like share transfers or capital raises. (1 in progress, 4 met across 5 tracked commitments)
  > On the second question on the unlisted company. As I have said in my last investor call also, the deadline is September 2024. And it has conditions of private companies, which have a turnover of INR40 crores or share capital of INR4 crores. But only when these companies would like to either raise ca
- **[CATALYST] Multi-Asset Clearing Growth** (NEUTRAL): The company is facilitating the electronic ownership and transfer of commodity assets through CCRL.
  > Facilitates ownership & transfer of commodity assets in electronic mode. It serves commodity exchanges and wider market beyond.
- **[METRIC] Demat Account Base and Activity** (POSITIVE, MET): Management highlighted the continued focus on Tier 3 and Tier 4 cities as a driver for the 42% increase in registered accounts, aligning with the 'Neev@25' strategic outreach. (2 in progress, 3 met across 5 tracked commitments)
  > And therefore, the true-to-label cost whilst it's a regulatory nudge is also an important part of the strategy of CDSL to ensure that there's a long-term sustainable participation by more and more new investors coming into the securities market fold and into the demat fold, so that the percentage of
- **[METRIC] Monthly New Demat Accounts** (NEUTRAL): CDSL is executing a strategic financial literacy campaign across 25 cities with a focus on border areas and armed forces. — target: 25 cities
  > CDSL completed a pan-India 25-cities financial literacy campaign, 21 of which were border cities & many of these events were for armed forces as per our focus on Empowering our Protector
- **[METRIC] Daily Settlement Throughput** (NEUTRAL, NOT_YET_DUE): The single charge mandate per SEBI circular became effective on October 1, 2024. Management noted that the impact will start appearing in the Q3 results (October-December quarter). (1 not yet due across 1 tracked commitment)
  > Nehal Vora: So, the impact of the pricing cuts will start giving effect from 1st of October where single charge as per SEBI circular, we have kind of put in place.
- **[PRINCIPLE] Transaction vs Annuity Revenue Mix** (POSITIVE, MET): The impact of the price reduction (implemented in October 2024) was visible in Q3 FY25, contributing to a 29% quarter-on-quarter decline in transaction income. (3 met across 3 tracked commitments)
  > And you will be able to see a full quarter impact from the next quarter onwards.
- **[PRINCIPLE] Duopoly Market Structure Advantage** (NEUTRAL): CDSL is maintaining a price advantage by keeping costs INR 0.50 lower than the competition to drive value proposition and account retention. — target: INR 0.50 cheaper than competition
  > Also, in terms of cost, we are INR0.50 cheaper than that of our competition. So, it is the overall scheme of things, which people will take into consideration as to where they would like to.
- **[PRINCIPLE] KYC Registry Monopoly Position** (POSITIVE, EXCEEDED): The company has grown its KYC record base to over 8.57 crore, exceeding the previously noted target of 8.20 crore. (5 exceeded across 5 tracked commitments)
  > And once they start off in this financial, year, we will see more revenues coming from there. On the eSign business, the way it functions is that we do not tie up with the end customer who is a participant or the broker, but there is a third-party service provider, who gives the entire onboarding so
- **[PRINCIPLE] Settlement Technology Backbone** (NEGATIVE, REVISED): Standalone IT costs for Q2FY25 were ₹18 crore against an operating income of ₹248 crore, representing approximately 7.2% of operating income. On a consolidated basis, IT costs were ₹24 crore against ₹359 crore total income (approx 6.7%). While slightly below the 10-12% range in percentage terms due to the massive revenue surge, the absolute spend has increased from ₹13 crore in Q2FY24. (1 met, 1 in progress, 1 revised across 3 tracked commitments)
  > Second is there are newer ways on security side, on the application side, which make it easier, more seamless with AI coming in also. So, the technology has to keep in step with all these newer reforms which are coming into play also.
- **[TREND] Demat Growth Rate Moderation** (POSITIVE, MET): Management confirmed the completion of the pan-India 25-cities financial literacy campaign, including the specific focus on 21 border cities and armed forces. (2 met across 2 tracked commitments)
  > CDSL completed a pan-India 25-cities financial literacy campaign, 21 of which were border cities & many of these events were for armed forces as per our focus on Empowering our Protector
- **[TREND] Corporate Actions Digitization Growth** (POSITIVE, MET): The company successfully launched the investor education website in the targeted 12 languages. (2 met across 2 tracked commitments)
  > SEBI Chairperson Smt. Madhabi Puri Buch launched CDSL’s new Multi-Lingual eCAS services : eCAS is now available in the preferred language of the investor
- **[TREND] Non-Securities Repository Diversification** (POSITIVE, MET): Management confirmed that LIC integration is expected to go live in November 2025, which is the immediate next step for scaling this business. They have already signed up two new customers in the current half-year. (2 in progress, 2 met across 4 tracked commitments)
  > Yes, the LIC integration is work in progress. We are expecting the integration to happen soon... We are actually betting to increase the market share in the coming quarters.
- **[TREND] Same-Day Settlement Rollout** (NEUTRAL): The company is pre-planning technology investments to handle potential volume growth and new product requirements like T+0 settlement.
  > So, we will have to kind of pre-empt also the potential de-growth. So, to ensure that the technology, but it takes time to build technology. And therefore, it has been all around... So you need to really preplan in future in kind of really in advance as to how you will be investing in this.
- The effective tax rate for Q3FY26 on a standalone basis was approximately 28.3% (34 crore tax on 120 crore net profit), which is above the guided range. (1 missed across 1 tracked commitment) (NEGATIVE, MISSED)
  > So, we've continued to maintain our policy guidance on dividend payout at 60% of our operating profits.

### Business Model

- **[CATALYST] SEBI Cyber Resilience Requirements** (NEGATIVE, Change: CONTRACTING): The company is facing increased margin pressure due to mandatory technology and cybersecurity spends required by regulators to maintain market infrastructure stability. (1 shifted, 1 contracting)
  > our PBT margin is something 58% and last year it was 61%. Quarter-on-quarter, it is even worse... technology expenses went up by almost 70% compared to the last year.
- **[METRIC] Demat Account Base and Activity** (POSITIVE, Change: EXPANDING): The network effect is expanding as the total demat account base crossed the 15 crore milestone, though the pace of new additions (Net A/c opened) moderated to 64 lakhs in Q4 from 92 lakhs in Q3. (5 expanding)
  > First depository to cross the milestone 14.50+ crore demat accounts... Became the First Listed Depository in Asia Pacific Region
- **[METRIC] Monthly New Demat Accounts** (NEGATIVE, Change: CONTRACTING): While CDSL maintains a high market share, its share of incremental (new) account additions moderated to 82% from a peak of 93% in Q3 FY25, indicating increased competition. (1 contracting)
  > CDSL's BO Account as on (in lakhs): 1,727... Number of Issuers: 46,271
- **[METRIC] Daily Settlement Throughput** (NEUTRAL, Change: STABLE): Transaction charges saw a notable contraction of 16.9% in the final quarter of FY25 compared to Q3, reflecting a cooling in market trading activity despite the growing account base. (3 contracting, 1 stable across 1 engine)
  > Transactions Charges Q3FY26: 60; Q3FY25: 59
- **[PRINCIPLE] Transaction vs Annuity Revenue Mix** (POSITIVE, Change: EXPANDING): Annual Issuer Income continues to expand as the primary stable revenue pillar, growing 7.4% sequentially from Q3 to Q4 FY25, and significantly up from the previous year's quarter. (5 expanding across 1 engine)
  > Annual Issuer Income Q3FY26: 113; Q3FY25: 81
- **[PRINCIPLE] Duopoly Market Structure Advantage** (POSITIVE, Change: STABLE): The company maintains its pricing moat by remaining INR 0.50 cheaper than the competition for transaction charges, though it is exploring potential price hikes with the regulator. (2 stable)
  > Became the First Listed Depository in Asia Pacific Region... First depository to cross the milestone 14.50+ crore demat accounts
- **[PRINCIPLE] KYC Registry Monopoly Position** (NEGATIVE, Change: CONTRACTING): Revenue from online data charges (KYC) grew 30% quarter-on-quarter, significantly outperforming the 14% growth in new demat accounts due to increased 'fetches' from mutual fund and existing investors. (1 expanding, 4 contracting across 2 engines)
  > Online Data Charge Q3FY26: 49; Q3FY25: 56
- **[TREND] Demat Growth Rate Moderation** (NEGATIVE, Change: CONTRACTING): KYC revenue continues to face a sequential decline, now representing 13% of total consolidated revenue, primarily due to lower account opening volumes and fewer KYC fetches. (1 contracting)
  > It is around 13% in the current quarter... the drop in income was primarily because of market conditions where the number of accounts were lower, which resulted in lower KYC fetches.
- **[TREND] Corporate Actions Digitization Growth** (POSITIVE, Change: EXPANDING): Income from IPOs and Corporate Actions experienced a sharp decline of 56.9% in Q4 FY25 compared to the previous quarter, indicating a significant slowdown in primary market activity. (2 contracting, 3 expanding across 2 engines)
  > IPO / CA Income Q3FY26: 59; Q3FY25: 58
- **[TREND] Non-Securities Repository Diversification** (NEUTRAL): CDSL is diversifying into non-securities areas, such as insurance repositories, to create new long-term revenue streams beyond the stock market. — Insurance Repository
  > From the Insurance Repository point of view, the operating revenue has been steady... we are trying to increase our market share within this framework.
- Other income grew significantly in the final quarter, primarily driven by mark-to-market gains on the company's debt investment portfolio. (1 expanding across 1 engine) (POSITIVE, Change: EXPANDING)
  > Other Income Q3FY26: 52; Q3FY25: 44

### Future Growth

- **[CATALYST] SEBI Cyber Resilience Requirements** (POSITIVE, Trend: ACCELERATING): CDSL is significantly increasing its capacity building through technology. IT costs on a consolidated basis have risen from Rs. 12 crore in Q1FY24 to Rs. 26 crore in Q1FY25, a 116% increase to support higher volumes and security. (1 accelerating across 1 signal)
  > IT Cost ... Q1FY24 12 ... Q1FY25 26
- **[CATALYST] Full Demat Mandate Expansion** (POSITIVE, Trend: NEW_TREND): Growth in the issuer base is being driven by new regulatory mandates requiring small and unlisted companies to dematerialize their shares. (1 new trend, 1 steady across 2 signals)
  > Amit, in 3 months, we have added 3,428 companies and onetime fee i.e. issuer admission fee is around INR5.15 crores from such companies.
- **[METRIC] Demat Account Base and Activity** (POSITIVE, Trend: ACCELERATING): The total number of Beneficial Owner (BO) accounts has shown consistent and accelerating growth over the last five quarters, crossing the 11.5 crore milestone in 2024. (1 accelerating, 4 steady across 5 signals)
  > CDSL's BO Account as on (in lakhs) ... Q3FY26 1,727
- **[METRIC] Monthly New Demat Accounts** (POSITIVE, Trend: ACCELERATING): The pace of new account additions is accelerating significantly, with the most recent quarter (Q4FY24) adding 109 lakh accounts compared to 85 lakh in the previous quarter. (5 accelerating across 5 signals)
  > CDSL Net A/c opened in the quarter (in lakhs) ... Q3FY26 76
- **[METRIC] ARPU of Demat Accounts** (NEUTRAL): CDSL is seeing a significant increase in its 'Folio' count, which represents the number of unique company-investor records it manages, reaching 33.76 crores. — Folio Count: Strong Y-o-Y growth
  > The folio remains what we had disclosed in first quarter, it is 33.76 crores. ... Obviously, on a Y-o-Y basis, we are seeing very strong growth here. And it has been a function of the higher additions and the rising folios.
- **[METRIC] Daily Settlement Throughput** (POSITIVE, Trend: STEADY): The number of International Securities Identification Numbers (ISINs), which represents the diversity of securities managed, is showing steady and consistent growth. (3 steady across 3 signals)
  > NUMBER OF ISINS ... Q2FY25 85,396
- **[PRINCIPLE] Transaction vs Annuity Revenue Mix** (POSITIVE, Trend: ACCELERATING): The number of companies (issuers) using CDSL services is accelerating, with a sharp jump to 24,858 in Q1FY25, up from 23,060 in the previous quarter, driving recurring annual income. (5 accelerating across 5 signals)
  > NUMBER OF ISSUERS ... Q3FY26 46,271
- **[PRINCIPLE] Duopoly Market Structure Advantage** (POSITIVE, Trend: NEW_TREND): Management indicates that while they do not disclose regulatory correspondence, they anticipate a potential issuer fee hike at an 'appropriate time' after a 10-year hiatus. (1 new trend across 1 signal)
  > CDSL saw more than 75-+ lakh accounts opened during this quarter, bringing our total to 17.27 crores Demat accounts, maintaining our 80% share.
- **[PRINCIPLE] KYC Registry Monopoly Position** (POSITIVE, Trend: ACCELERATING): While specific revenue figures for the insurance segment are not isolated in the charts, the consolidated 'Online Data Charges' (which includes KRA/Repository services) shows a steady trend with a peak in Q4. (2 steady, 1 decelerating, 1 accelerating across 4 signals)
  > First and the largest KYC Registration Agency (KRA) in the country with over 9.95 crore KYC records.
- **[PRINCIPLE] Settlement Technology Backbone** (POSITIVE, Trend: ACCELERATING): Technology spending has seen a significant jump to handle higher market volumes and new settlement cycles, with annual tech costs rising 65% year-on-year. (5 accelerating across 5 signals, 2 leading indicators)
  > Introduction of Direct Pay-out of Securities in investor’s demat account
- **[TREND] Demat Growth Rate Moderation** (NEGATIVE, Trend: DECELERATING): New account additions for the quarter stood at 56 lakhs. Management noted a gradual slowing down in incremental additions compared to the last 5 years, though the overall ecosystem continues to expand. (1 decelerating across 1 signal)
  > The reason why I'm asking is that Demat account in general because we already added so many people in last 5 years is gradually slowing down. So, this slowdown will invariably impact on KYC.
- **[TREND] Corporate Actions Digitization Growth** (POSITIVE, Trend: ACCELERATING): The number of companies (issuers) registered with CDSL is accelerating, with a sharp increase of nearly 3,500 new issuers in the latest quarter alone. (1 accelerating, 1 new trend, 1 steady across 3 signals, 1 leading indicator)
  > Launch of Investor App Enables BO’s to monitor Open & Margin Position across various exchanges & clearing corporations.
- **[TREND] Non-Securities Repository Diversification** (POSITIVE, Trend: ACCELERATING): The insurance repository business (Centrico) is showing strong growth of 30% year-over-year, driven by new customer sign-ups and the launch of an online portal, despite a general industry decrease in policy issuance. (1 accelerating, 4 new trend across 5 signals)
  > From the Insurance Repository point of view, the operating revenue has been steady. And as you typically see, Jan, Feb and March period is the crucial period. So, we are trying to capitalize on this.
- The mandate for unlisted companies to dematerialize their shares is driving a surge in issuer additions, with over 3,500 unlisted companies admitted in recent quarters. This regulatory push creates a structural growth tailwind for CDSL's issuer services division. (POSITIVE)

### Risk Assessment

- **[CATALYST] SEBI Cyber Resilience Requirements** (NEGATIVE, Risk: MODERATE): Regulatory costs (SEBI/IPF) have eased slightly to ₹10 crore in Q4FY25 from ₹15 crore in Q3FY25, though they remain a recurring mandatory expense. (1 easing, 2 intensifying, 1 stable)
  > SEBI/IPF: Q3FY25 15, Q4FY25 10, Q1FY26 13, Q2FY26 16, Q3FY26 15
- **[METRIC] Demat Account Base and Activity** (POSITIVE): The pace of account openings improved sequentially, with 66 lakh accounts opened in Q2 FY26 compared to 56 lakh in Q1 FY26. Total demat accounts reached 16.5 crore, maintaining an 80% overall market share. (1 easing)
  > CDSL saw more than 65 lakh accounts opened in the quarter, bringing CDSL's total number of demat accounts to 16.5 crore, maintaining our 80% market share.
- **[METRIC] Monthly New Demat Accounts** (NEGATIVE, Risk: MODERATE): The pace of new account additions is decelerating sharply. Net accounts opened dropped from 118 lakhs in Q2FY25 to 92 lakhs in Q3FY25, and reached a low of 64 lakhs in Q4FY25. (3 intensifying, 2 easing)
  > CDSL Net A/c opened in the quarter (in lakhs): Q3FY25 92, Q4FY25 64, Q1FY26 57, Q2FY26 65, Q3FY26 76
- **[METRIC] Daily Settlement Throughput** (NEGATIVE, Risk: MODERATE): Stable to Intensifying; combined average daily turnover at BSE and NSE for December 2025 was approximately 8.3% lower than the same period in the previous year, indicating a cooling of market activity. (1 intensifying)
  > And second would be, as we can see for the past 1.5 years and as a general position that there is some softness that is prevailing in the capital markets in general in terms of the general market activity and with the commodities taking over and attracting a lot of investors right now.
- **[METRIC] System Availability Metrics** (NEGATIVE): Margins are under pressure; PBT margin dropped to 58% this year from 61% last year, with technology expenses specifically cited as a major headwind. (1 intensifying)
  > our PBT margin is something 58% and last year it was 61%. Quarter-on-quarter, it is even worse.
- **[PRINCIPLE] Transaction vs Annuity Revenue Mix** (NEGATIVE, Risk: HIGH): Transaction charges have declined for two consecutive quarters, falling from ₹83 crore in Q2FY25 to ₹59 crore in Q3FY25, and further to ₹49 crore in Q4FY25, indicating a significant slowdown in market-linked revenue. (3 intensifying, 2 easing, 1 high-severity)
  > Transactions Charges: Q3FY25 59, Q4FY25 49, Q1FY26 62, Q2FY26 59, Q3FY26 60
- **[PRINCIPLE] KYC Registry Monopoly Position** (NEGATIVE, Risk: MODERATE): CVL continues to hold a dominant position with 8.93 crore KYC records, but the 'Online Data Charges' revenue (KYC) fell from ₹51 crore in Q3FY25 to ₹37 crore in Q4FY25, suggesting competitive or volume pressure. (2 intensifying, 1 emerging, 1 easing, 1 stable)
  > The second part is on the KRA business, you're the market leaders there. The pricing there is significantly higher than the CKYC business there. And now that the government is improving the quality of data on CKYC, do you see that as a risk for pricing or the KYC registration business overall?
- **[PRINCIPLE] Settlement Technology Backbone** (NEGATIVE, Risk: HIGH): IT costs increased to ₹26 crore in Q1FY26 (Consolidated) from ₹24 crore in Q2FY25, while standalone IT costs jumped to ₹26 crore from ₹18 crore in Q2FY25, showing persistent upward pressure. (4 intensifying, 1 stable, 1 high-severity)
  > So, it gone from about 7% of revenue to 14%. So just looking backwards in terms of what this has enabled for us, could you give us some sort of, some KPIs in terms of success rate on transactions or capacity of transactions that CDSL is able to handle as a result of the increasing investment intensi
- **[TREND] Corporate Actions Digitization Growth** (NEUTRAL, Risk: LOW): Regulatory changes regarding the definition of 'small companies' and mandates for unlisted companies to join the depository could lead to a dip in new company registrations if the scope of the mandate is narrowed. [REGULATORY]
  > And also it has also been helped by the unlisted companies addition but seeing the change in regulation that has happened 1st of December, where the definition of not so small companies have been changed? So, in that context, how do you see the unlisted addition on behaving because that basically sh
- **[TREND] Non-Securities Repository Diversification** (NEUTRAL, Risk: LOW): The insurance repository business is facing stagnant growth in the number of new policies being issued across the industry, limiting the potential for revenue expansion in this diversification segment. [DEMAND]
  > As you would have seen the IRDA numbers, the insurance industry policy number growth has been more or less stagnant. It's not been increasing as expected.
- Consolidated 'Other Admin' expenses have risen to ₹54 crore in Q4FY25 from ₹52 crore in Q3FY25, showing persistent upward pressure on the cost base despite falling revenues. (5 intensifying) (NEGATIVE, Risk: MODERATE)
  > Other Admin: Q3FY25 52, Q4FY25 54, Q1FY26 57, Q2FY26 63, Q3FY26 65

### Scenario Analysis

- No significant impacts identified (POSITIVE)
  > Investor Presentation for the quarter (Q3) and nine months ended December 31,2025.
- 7 positive impacts identified; 1 negative impact identified (POSITIVE)
  > Excellence in Digital Execution by Tech circle

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