CDSL stock has skyrocketed 296% since March 2020 on surge in retail demat accounts

• Shares of CDSL have gained 3% on July 9 as the depository’s demat accounts have reached 40 million.
• Retail investors’ growing interest in investing in financial markets have benefited the depository.
• Central Depository Services’ subsidiary that manages KYC records of mutual fund inverters now has over 30 million KYC records of investors.

Shares of Central Depository Services (CDSL) have seen a four fold increase (296%) since March 2020 because the number of small investors in the country has grown sharply in the last year. On July 9, the stock gained 3% as the depository’s demat accounts reached 40 million.

The company earns a major part of the revenue from the annual fee by listed securities to the depositor followed by transactional charges by brokers for every transaction that is settled.

Central Depository Services’s subsidiary that manages KYC (know your customer) records of mutual fund investors now has over 30 million investors in its database.

Source: CDSL

The sell-off in equities made the share markets attractive right after the COVID-19 outbreak in the first three months of 2020. That lured a bunch of new investors to open new accounts. The subsequent bull run ⁠— the Sensex has gained as much as 40% since March 2020 then ⁠— led to many more joining in the fear of missing out.

“This journey of financial inclusion has to enhance to engage with a higher number of persons to foray into the securities market to achieve the objective to make India a capital market hub that is highly focused on corporate governance, technology, investor protection, transparency and sustainability,” said Nehal Vora, managing director and chief executive of CDSL in a press release on July 8.

Tech startups like Zerodha, Groww and Upstox, which provide an easy and convenient way of investment, have also gained immensely from this wave.

Zerodha holds 18.85% market share with 3.4 million unique active investors followed by Upstox with 10.9% market share with 1.9 million unique active investors, reveals data by stock market analytics platform Trade Brains.

Source: Trade Brains

CDSL’s net profit grew to ₹201 crore in the financial year 2021 from ₹106 crore in March 2020, a rise of 50%. Total income rose to ₹400 crore from ₹284 crore during the period.

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