Brokerages were mixed on CDSL despite the company delivering strong results in its June quarter.

What Happened: CDSL reported an 82% year-on-year jump in net profit to ₹134.20 crore from the previous year on Saturday. Its revenue in the quarter was up 72% to ₹257.38 crore. EBITDA reached ₹154.4 crore with a margin of around 60%.

The total number of demat accounts stood at 12.5 crore for the depository service as of June 30, 2024. In Q1 99 lakh new demat accounts were opened. 

Brokerage Views: Nuvama Institutional Equities gave a "hold" call while increasing the target price to ₹2,550. The brokerage points out that margins are likely to remain elevated as the company invests to improve its technology services more robustly as instructed by the market regulator. Technology expense was up 107.5% year on year and 28.1% quarter on quarter. 

See Also: Kotak Says Small Events May Change Retail Investor ‘Greed’ Into ‘Fear’

Ambit gave a "sell" call with a target price of ₹1,850. The brokerage said the transaction revenue for the company which makes up 38% of depository revenues will be at risk as the company is introducing two new slabs in June 2024 causing the lowest slab rate to fall by 12%. 

The introduction of "true label" pricing might also push the transaction charges down, the brokerage added. The technology costs remaining elevated and uncertainty around the size and timing of compulsory dematerialization of private sector companies are other risks according to the brokerage. 

HDFC Securities maintained a "buy" call with a target price of ₹2,650. The brokerage expects a revenue compound annual growth rate of 23% from FY24 to FY27. The company commands a leadership position in the demat accounts section with 77.3%  market share and 91% incremental share. 

The growth in demat accounts and higher retail folios will help annuity revenue growth, the research firm said. The company is also investing to improve its technology infrastructure which will affect its margins, the brokerage added. 

Price Action: CDSL shares lost early morning gains of 3.4% jumping to ₹2,390 and were trading flat on Tuesday afternoon at ₹2311.

Read Next: No Relief for Infosys As India Maintains Stance on Tax Demand: Report