Concall AI

C D S L — Q1 FY26 earnings call

Call held 28 Jul 2025

Management summary

CDSL reported mixed financial results for Q1 FY26, with consolidated total income growing but consolidated net profit declining. Standalone performance, however, showed strong growth in both income and profit. The company continued to expand its Demat account base, maintaining a dominant market share, while also investing in technology and human resources to build a resilient infrastructure. Management addressed concerns regarding KYC revenue decline and rising costs, emphasizing a long-term strategic focus.

Highlights

Consolidated total income for Q1 FY26 increased to INR 295 crores from INR 287 crores in the previous corresponding quarter, representing a 2.79% YoY growth.
CDSL added over 56 lakh Demat accounts in Q1 FY26, bringing the total to 15.86 crore accounts as of June 30, 2025.
CDSL maintained a strong market share of 79% in Demat accounts.
Standalone net profit for Q1 FY26 saw a significant jump to INR 152 crores, up from INR 105 crores in the previous corresponding quarter, a 44.76% YoY growth.
CDSL was recognized with the 'Innovation in Market Infrastructure Award' and its CFO received the FE CFO award.

Concerns

Consolidated net profit for Q1 FY26 declined to INR 102 crores from INR 134 crores in the previous corresponding quarter, a 23.88% YoY decrease.
KYC revenue experienced a decline primarily due to market conditions, resulting in a lower number of accounts and KYC fetches.
Employee expenses showed a sharp rise quarter-on-quarter, partly due to year-end performance appraisal variable payouts and recruitment for critical functions.

Key financials

01 Consolidated Total Income ₹295 Cr +2.8%YoY
02 Consolidated Net Profit ₹102 Cr -23.9%YoY
03 Standalone Total Income ₹312 Cr +41.2%YoY
04 Standalone Net Profit ₹152 Cr +44.8%YoY
05 Total Demat Accounts ₹15.86 Cr
06 Market Share 79%

What they filed

Q1 FY27: revenue up 13.1%, net profit up 15.7% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	322	278	224	259	319 −1%	304 +9%	263 +17%	293 +13%
Expenses	122	117	115	129	143	145	147	155
EBITDA	200	161	109	130	176 −12%	160 −1%	116 +6%	138 +6%
Margin	62%	58%	49%	50%	55%	52%	44%	47%
Other income	37	21	32	36	22	29	6	48
Interest	0	0	0	0	0	0	0	0
Depreciation	12	13	14	15	16	17	18	19
Profit before tax	225	168	127	151	183 −19%	172 +2%	103 −19%	167 +11%
Tax rate	28%	23%	21%	32%	23%	23%	23%	29%
Net profit	162	130	100	102	140 −14%	133 +2%	80 −20%	118 +16%
EPS	7.75	6.22	4.80	4.90	6.71	6.38	3.84	5.62

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

CDSL Ventures Limited (CVL)
₹43.06 Cr Total Income₹12.71 Cr Profit After Tax

What to watch in Q2 FY26

LIC Integration for Insurance Repository

soon

Current Work in progress

Target Integration complete, expecting steady growth

Why it matters

Key for expanding market share in the insurance repository segment and driving future growth.

Yes. Hi. Yes, the LIC integration is work in progress. We are expecting the integration to happen soon.

Risks & concerns

KYC Revenue Volatility
medium

KYC income declined due to market conditions, lower account openings, and KYC fetches.

Both acknowledged
Demat Account Opening Slowdown
medium

Demat account opening is slowing down incrementally compared to the past, which could impact KYC revenue.

Analyst acknowledged
EBITDA Margin Compression
medium

Consolidated EBITDA margins have compressed from ~60% to ~50%, attributed to rising employee and technology costs, though management views margin as a byproduct of strategic investments.

Both downplayed
Unlisted Segment Revenue Instability
medium

Revenue from the unlisted segment can be volatile as it depends on specific company transactions and includes one-time application fees.

Analyst acknowledged
Central KYC Revamp Uncertainty
low

Government's plan to revamp Central KYC by March 2026 could impact CDSL's KYC business, with details still awaited.

Analyst not addressed

Q&A highlights

6 direct

Employee Expenses & IT Spends Direct

So, as we are growing in size, and I would urge you to even look at the market infrastructure institutions with regulations which SEBI have mooted. For depositories, there is a separate regulation and separate for exchanges and clearing corporation. It constitutes into vertical 1, vertical 2 and vertical 3, where the IT and critical operations form a part of vertical 1, regulation risk and control functions form part of vertical 2 and business and others form part of vertical 3. So, as per that, the requisite focus needs to be given for continuity of critical operations and technology and as we are growing in size and sophistication, we need the people to get recruited in all these three verticals at the paramount form. Also, the year-end performance appraisal variable payouts have been reflected in this quarter.

Addressed the reasons for the sharp rise in employee costs and the strategic intent behind IT investments, linking them to regulatory compliance and long-term infrastructure building.

Asked by Ashish Kumar

Annual Issuer Charges Jump Direct

So, on the first count, it is mainly an account of increase in folios which are relevant to the CDSL part as per the framework which SEBI has prescribed on how such charges are supposed to be charged to companies. So, that will answer your first question. In the unlisted front while it is a new source, it is kind of early days in terms of the overall scheme of things.

Clarified the primary driver for the increase in annual issuer charges, attributing it to folio growth and providing context on the nascent stage of unlisted revenue.

Asked by Amit Chandra

KYC Revenue Decline Direct

If you ask the percentage of creation and fetch, it is about 85% to about 15%. And the drop in income was primarily because of market conditions where the number of accounts were lower, which resulted in lower KYC fetches.

Provided a clear explanation for the decline in KYC revenue, linking it to broader market conditions and reduced account activity.

Asked by Amit Chandra

Central KYC Revamp Impact Partial

So, see overall we will have to see once the new model is announced. But I think the intent is that the existing KRA system is efficient. It is seen by the market. So, how it can be leveraged further to enhancing the benefits of that as we move to the next phase of the KYC model. So, it is kind of really early days, but I am fairly sure and certain that the existing benefits of our system will continue and is at least expected to continue in the new framework also.

Addressed concerns about a potential regulatory change (CKYC revamp) but indicated uncertainty about the exact impact while expressing confidence in the existing system's continued relevance.

Asked by Uday Pai

EBITDA Margin Compression Direct

Our intent is to provide a long-term proposition. Whatever EBITDA we earn, our intent is not to earn a particular EBITDA margin, either high or low. We ensure that the right platform is provided to the market, to the ecosystem. EBITDA margin is the byproduct of that because I think it's the intent is the long-term intent to ensure that the value proposition continues to be enjoyed by the ecosystem. And then that will lead to whatever the EBITDA margin is.

Explained management's philosophy on EBITDA margins, stating it's a byproduct of strategic investments rather than a direct target, which helps set investor expectations.

Asked by Prayesh Jain

Unlisted Segment Revenue Volatility Direct

I said INR6.39 crores was the income from unlisted companies. ... It was INR19.74 crores.

Clarified the current quarter's unlisted revenue and provided a breakdown of a previous year's higher figure, distinguishing between recurring issuer fees and one-time application fees, which helps understand revenue stability.

Asked by Swarnabh Mukherjee

Demat Account Slowdown & KYC Partial

Yes. But again, Demat accounts slowing down may not only be because a lot of them added, because lot of people are using.

Acknowledged the slowdown in Demat account openings but offered a nuanced perspective that it's also due to increased usage, implying a shift in market dynamics rather than just a decline in interest.

Asked by Sanketh Godha

Insurance Repository Market Share Direct

Yes. Hi. Yes, the LIC integration is work in progress. We are expecting the integration to happen soon. Out of the four repositories, three have participated and we are one of them. And as far as the overall opportunity is concerned. Yes, there is a large number of accounts which are still untapped. So, we have gone live with our online opening of account over there and we are expecting a steady growth there as well. We are actually betting to increase the market share in the coming quarters.

Provided an update on the insurance repository business, including the ongoing LIC integration and plans to increase market share from untapped accounts, indicating future growth avenues.

Asked by Prayesh Jain

3 min read 6 chapters

Detailed narrative

Industry Overview & Demat Accounts Growth

CDSL reported a robust increase in Demat accounts, adding over 56 lakh new accounts in Q1 FY26, bringing its total to 15.86 crore and maintaining a dominant 79% market share as of June 30, 2025. The average daily turnover on BSE & NSE also saw a 15% jump from the last quarter, reaching INR 1.16 lakh crores. The company highlighted its contribution to investor education through new initiatives like the MyEasi app feature for proxy advisory recommendations and a new Investor Protection Fund awareness platform available in 11 languages.

Financial Performance: Consolidated & Standalone

For Q1 FY26, CDSL's consolidated total income grew to INR 295 crores from INR 287 crores in the previous corresponding quarter, a 2.79% YoY increase. However, consolidated net profit declined to INR 102 crores from INR 134 crores, a 23.88% YoY decrease. In contrast, standalone performance was strong, with total income rising to INR 312 crores from INR 221 crores (41.18% YoY growth), and net profit increasing to INR 152 crores from INR 105 crores (44.76% YoY growth) year-over-year. The subsidiary, CDSL Ventures Limited, saw its total income decrease to INR 43.06 crores from INR 64.37 crores, with profit after tax falling to INR 12.71 crores from INR 28.55 crores.

KYC and Issuer Charges Dynamics

KYC revenue, which constitutes about 13% of total console revenue, experienced a decline primarily due to prevailing market conditions leading to fewer account openings and KYC fetches, with creation being 85% and fetch 15%. Annual issuer charges saw a sharp jump, mainly driven by an increase in folios for existing listed companies, with new issuances contributing as they occur. The unlisted segment generated INR 6.39 crores this quarter, with INR 5.23 crores being one-time application processing fees, indicating some volatility in this newer revenue stream.

Employee & Technology Investments

The company reported a sharp rise in employee expenses, attributed to growth in size, regulatory requirements across critical functions (IT, risk, business), and the reflection of year-end performance appraisal variable payouts in this quarter. CDSL emphasized its strategic focus on building a long-term resilient infrastructure through continuous investment in technology, including new platforms and enhancing efficiency, rather than viewing technology spend as a start-stop expense. This approach aims to ensure the company has the right infrastructure and people to handle future growth and maintain sophistication.

Unlisted Segment & Insurance Repository

CDSL admitted 3,486 companies in the unlisted space this quarter, with the total outstanding number exceeding 20,000. Revenue from this segment is dependent on companies undertaking transactions. In the insurance repository business, CDSL Ventures has crossed 18 lakh cumulative policies and 20 lakh e-insurance accounts. The integration with LIC is currently in progress, with management expecting it to happen soon and aiming to increase market share from a large pool of untapped accounts through online account opening.

EBITDA Margin Philosophy

Management addressed concerns regarding the compression of consolidated EBITDA margins, which fell from approximately 60% in the previous year to around 50%. Nehal Vora clarified that CDSL does not target a specific EBITDA margin, high or low, but rather focuses on providing the right platform and value proposition to the market and ecosystem. He stated that the EBITDA margin is considered a byproduct of these long-term strategic investments and operational efficiencies, reflecting the company's intent to ensure value for all stakeholders.

This is an AI-generated summary of a publicly available earnings call transcript.

View original transcript