C D S L — Q4 FY25 earnings call

Call held 5 May 2025

Management summary

CDSL reported record full-year revenues and profits for FY25, driven by strong demat account growth and market share gains. However, Q4 FY25 saw a decline in both consolidated income and net profit, primarily due to muted market activity impacting transaction, KYC, and corporate action revenues. The company emphasized its continuous investment in technology and commitment to shareholder returns, while addressing concerns about its insurance repository business and the impact of potential regulatory changes.

Highlights

  • FY25 consolidated total income of INR 1,199 crores, up 32% YoY from INR 907 crores.

  • FY25 consolidated net profit of INR 526 crores, up 25% YoY from INR 420 crores.

  • CDSL's demat accounts grew 32% to 15.29 crores, securing ~79% market share.

  • CVL's income increased 35% to INR 254 crores, and profit grew 28% to INR 109 crores in FY25.

  • Dividend payout ratio at 61.3% of operating profits, exceeding the 60% policy guidance.

Concerns

  • Q4 FY25 consolidated total income declined 4.12% to INR 256 crores from INR 267 crores YoY.

  • Q4 FY25 consolidated net profit declined 22.48% to INR 100 crores from INR 129 crores YoY.

  • KYC revenue experienced a 'steep fall' in the last 2 quarters due to market slowdown.

  • PBT margin declined to 58% in FY25 from 61% in FY24.

Key financials

2 periods

Headline

  • Consolidated Total Income (FY)
    ₹1,199 Cr
    YoY +32.2%
  • Consolidated Net Profit (FY)
    ₹526 Cr
    YoY +25.2%
  • CDSL Demat Accounts
    ₹15.29 Cr
    YoY +32%
  • PBT Margin (FY)
    58%

Q4

  • Consolidated Total Income
    ₹256 Cr
    YoY -4.1%
  • Consolidated Net Profit
    ₹100 Cr
    YoY -22.5%

What they filed

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

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue322 278 224 259 319 −1%304 +9%263 +17%293 +13%
EBITDA200 161 109 130 176 −12%160 −1%116 +6%138 +6%
Net profit162 130 100 102 140 −14%133 +2%80 −20%118 +16%
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)
    ₹254 Cr Income (FY)₹109 Cr Profit (FY)

Capital allocation

high confidence
  • Dividend ₹12.5/share (final) Payout ratio 61.3%
    We are about 61.3% payout. So, we've continued to maintain our policy guidance on dividend payout at 60% of our operating profits. In fact, it is slightly more than that this year. ... This year we declared a record dividend of INR 12.50 per share. With the 1:1 bonus factor, it effectively doubles to INR 25.00 per share, the highest ever.
  • Liquidity Cash ₹1,500 Cr Analyst mentioned 'huge amount of cash in our books, INR 1,500 crores', which management did not dispute.
    One is that, see, like we do not charge anything for the demat account, and we say that we have 15 crore-odd demat accounts. Then we have a huge amount of cash in our books, INR1,500 crores, for which there didn't seem to be obvious usage that what you said is going to be put to.

What to watch in Q1 FY26

Centrico Integration with LIC

next quarter
Current LIC sign-up completed, integration work in progress
Target LIC providing resources for integration, expecting progress

Why it matters

Successful integration could significantly boost Centrico's performance and market share in the insurance repository business.

Yes. LIC sign-up has just happened basically, and the integration work is in progress. We are expecting LIC to provide us the resources to do the integration there.

Risks & concerns

  • Market Volatility Impact on Revenues

    medium

    Muted market response, delivery volumes, demat account growth, mutual fund investments, and IPOs in Q4 FY25 led to declines in KYC, IPO/corporate action, and transaction revenues.

    Management acknowledged

  • Regulatory Changes (CKYC) Impact on KRA Business

    medium

    SEBI's indication of a centralized KYC system (CKYC) raises questions about the future role and pricing ability of CDSL's KRA business, with management stating it's 'work in progress'.

    Analyst not addressed

  • Underperformance of Centrico Insurance Repository

    medium

    Centrico's performance lags competitors in market share and eIA accounts, attributed by management to its non-mandatory, regulatory-driven nature, though new initiatives are underway.

    Analyst acknowledged

  • PBT Margin Compression

    low

    PBT margin declined to 58% in FY25 from 61% in FY24, noted by an analyst as a concern for the company's direction.

    Analyst acknowledged

Q&A highlights

6 direct, 2 evasive
Technology Spend: Recurring vs. One-time Evasive
We don't give that because, see, I'll tell you why we don't give it, Supratim, because it's a combination of fusion costs. So, you cannot segregate what is infra versus application. There is some, which is mixed cost. So, it would not create a right differentiation, and it is not right to even differentiate.

Management declined to provide granularity on technology costs, which analysts sought to understand the nature of significant cost increases.

Asked by Supratim Datta

KRA Business and Centralized KYC (CKYC) Evasive
As regards to the second question on KRA, it's a process, which is the same interview of the SEBI Chair also. It talks about the efficiency of the KRA. We will have to wait and watch how that really pans out because it's yet not come out. It is all work in progress.

Analysts questioned the impact of potential regulatory changes (CKYC) on CDSL's KRA business, but management offered no clear outlook.

Asked by Supratim Datta

KYC Revenue Decline Direct
overall, the market volume, delivery volumes, growth in demat account has all seen a muted response we've seen in the fourth quarter. And I think that is kind of the overall impact on CVL also, but I'll ask Sunil to take that question. ... So that's what has led to the drop in income.

Management attributed the 'steep fall' in KYC revenue to broader market slowdown, impacting both creation and fetch records.

Asked by Amit Chandra

IPO and Corporate Action Revenue Decline Direct
So, it's overall market impact, the impact is across both those teams. We don't give that different categories in the public domain. But to answer your question, it is overall impact amount.

Management confirmed that the 'sharp fall' in IPO and corporate action revenue was due to overall market impact, without providing specific breakdowns.

Asked by Amit Chandra

Insurance Repository Business Performance Direct
If you look at the past performance, we are in this business for almost 14 years. And again, the insurance repository business is also regulatory driven. The initial 10 to 12 years, we were hoping that the repository as a product would be made mandatory by the respective regulators, and we shall await and are hopeful that in future that guidelines may come in. ... But last year, there has been a lot of changes, which has happened. Apart from 3 revenue streams from which the business comes, we have now opened up the direct portal for the end policyholders to come and directly open their accounts and there has been some traction.

An analyst challenged Centrico's underperformance compared to competitors, leading to management explaining the regulatory context and recent strategic shifts.

Asked by Santosh Keshri

Overall Company Direction and Shareholder Friendliness Direct
Santosh, you need to see those various communications. I think it is your opinion, I don't think that's the opinion of people who I meet and certainly not the opinion of what is in the mind of CDSL as a management and also Board. We have a very specific focus. Otherwise, in the last 5 years, we would not have grown from about 1.8 crores demat accounts to 15.5 crores. These numbers cannot just happen out of thin air.

A direct challenge from a long-term shareholder regarding the company's strategic direction and PBT margin decline was met with a strong defense from management, citing growth and shareholder value creation.

Asked by Santosh Keshri

Delivery-Based Volume Impact on Performance Direct
And that's what is important from a depository standpoint. Our business is in long-term products that people take more and more shares into delivery, and that's how we are promoting a culture of also people staying long term in markets. And also, as an infrastructure institution, it's important to understand that we are building the right building blocks so that when we saw the spurt in volumes during COVID and post COVID, CDSL was able to withstand that higher volume and continue to work seamlessly.

Management explained that the dip in Q3/Q4 performance was directly linked to a drop in overall market volumes and delivery-based volumes, emphasizing their focus on robust infrastructure.

Asked by Siddharth S.

Unlisted Revenue for FY25 Direct
Unlisted revenue for the full year is at INR35.95 crores, so almost INR36 crores.

Provided a specific financial figure for a less frequently discussed revenue stream.

Asked by Amit Chandra

3 min read 7 chapters

Detailed narrative

Q4 FY25 Performance Overview and Market Impact

CDSL reported a challenging Q4 FY25, with consolidated total income declining 4.12% YoY to INR 256 crores from INR 267 crores. Consolidated net profit saw a more significant drop of 22.48% YoY, falling to INR 100 crores from INR 129 crores. Standalone figures also reflected this trend, with net profit decreasing to INR 81 crores from INR 97 crores YoY. Management attributed this downturn primarily to a 'muted response' in market volume, delivery volumes, demat account growth, mutual fund investments, and IPOs during the quarter.

Record Full-Year FY25 Financials

Despite the Q4 slowdown, CDSL achieved record full-year performance for FY25. Consolidated total income reached INR 1,199 crores, marking a substantial 32% YoY growth from INR 907 crores in FY24. Consolidated net profit for the year also hit a record INR 526 crores, increasing 25% YoY from INR 420 crores in FY24. Standalone results mirrored this strength, with total income growing 33% to INR 985 crores and net profit rising 27% to INR 462 crores.

Strong Demat Account Growth and Market Dominance

The Indian capital markets added 4.1 crore demat accounts in FY25, bringing the national total to 19.24 crores. CDSL significantly contributed to this growth, experiencing a 32% increase in its demat accounts to reach 15.29 crores as of March 31, 2025. This performance allowed CDSL to maintain a dominant market share of approximately 79% in the depository space. The average daily turnover in the market also surged by about 37% in FY25, reaching over INR 1,20,000 crores.

CDSL Ventures Ltd (CVL) and New Revenue Streams

CDSL's subsidiary, CDSL Ventures Limited (CVL), demonstrated robust growth in FY25. Its income increased by 35% to INR 254 crores from INR 188 crores in FY24, and profit grew by 28% to INR 109 crores from INR 86 crores. Management highlighted the introduction of unified features in the MyEasi investor app and the successful integration of electronic consolidated account statements. New initiatives like eSign and eKYC are expected to contribute more revenues in the current financial year as intermediaries register.

Centrico Insurance Repository Strategy and LIC Partnership

Centrico Insurance Repository Limited has recently signed up with LIC, with integration work currently underway. Management explained that the insurance repository business is regulatory-driven and not mandatory, which has historically limited investment. However, they noted that 90% of the market is still available and are strategizing for future growth, including opening a direct portal for policyholders. Unlisted revenue for FY25 stood at approximately INR 36 crores.

Technology Investment and Operational Efficiency

CDSL continues its focus on enhancing the capital market ecosystem through significant technology investments. These investments span hardware, infrastructure, applications, security, and connectivity, aimed at bringing in newer tools and techniques for better speed and efficiency. While management did not provide a breakdown of recurring versus one-time technology costs, they stated that a 'steady percentage' of revenue is allocated to technology, driven by regulatory expectations for deploying the newest technology.

Shareholder Returns and Capital Management

CDSL demonstrated its commitment to shareholder returns by declaring a dividend of INR 12.50 per share for FY25. With a 1:1 bonus factor, this effectively translates to INR 25.00 per share, marking the highest dividend ever. The company's dividend payout ratio stood at 61.3% of operating profits, exceeding its policy guidance of 60%. Management also addressed concerns about a substantial cash balance of INR 1,500 crores, affirming its strategic use for growth and maintaining a robust platform.

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