Business

CDSL IPO gains full subscription on Day 1

19 Jun 2017 | By Sneha Johny
CDSL's IPO Day 1 clocks full subscription

The Central Depository Services Ltd (CDSL), one of the two depositories in India, saw its initial public offering (IPO) oversubscribed nearly 1.01 times today, its first day of issue.

The offering was scheduled to raise Rs. 524 crore, reports said.

However, CDSL received bids for 2,61,69,500 shares against the issue size of 2,48,27,046 shares.

In context: CDSL's IPO Day 1 clocks full subscription

19 Jun 2017CDSL IPO gains full subscription on Day 1

What are brokerage houses saying?

"Considering the valuations at which the issue is available, most of the retail investors should go out and invest in this company. It is duopoly business with NSDL and CDSL being the only two players right now in the market," said Abhimanyu Sofat, IIFL.
How are CDSL's financials?

Robust business modelHow are CDSL's financials?

The depository's strong financials, coupled with limited cash requirement in the future has it pitched as one of the top contenders in the market currently.

Analysts have stated that the company's stock has been valued 18.2 times its FY17 earnings.

Due to its business model that has high entry barriers, analysts forecast robust growth for the company.

RisksResearchers hinting at risks associated with CDSL's stock?

Brokerages also warned against regulatory risks and events of fraudulent activities.

Since a large portion of the depository's business is based on transactions and trading volumes, data security and strong IT systems need to be in place.

If there arises any IT malfunctions or security breach, it could hamper the depository's business and trigger massive losses.