CDSL IPO received a huge response on the final day of bidding and was subscribed 169.41 times at the close of bidding today. Of their respective quota of reserved shares, employees bid 1.40 times, retail investors bid 22.30 times, institutional investors bid an impressive 148.71 times, non-institutional investors bid a humongous 563.02 times. The total subscription at 3 pm on the final day of bidding was already 101.55 times.
The IPO is worth up to Rs 524 crore with 2,48,27,046 equity shares on offer. The shares with a face value Rs 10 each will list on NSE and the retail allocation has been fixed at 35%. SEBI rules bar stock exchange companies from self-listing.
On Friday, the issue raised Rs 154.07 crore by issuing 1.03 crore equity shares to 15 anchor investors – SBI Magnum Tax Gain Scheme, ICICI Prudential, HSBC Indian Equity Mother Fund, Abu Dhabi Investment Authority–Behave, FIL Investments (Mauritius), Goldman Sachs India etc.
The company is one of the two depositories in India which naturally makes it a sought-after upcoming IPO. NSE’s NSDL is the only competitor for CDSL. Just like BSE was the first stock exchange to list in India, CDSL will be the first depository to be quoted on an Indian stock exchange.
CDSL was established in 1997 by BSE, which holds a 50.05% equity stake in the depository unit. In addition to BSE, SBI and Bank of Baroda will also reduce their shareholding while Calcutta Stock Exchange will sell all the 1,000,000 shares it owns.
Brokerage houses had recommended subscribing to the issue citing strong parentage, steady growth, a decent return on equity, and high barriers to entry. However, there are risks as well, such as losses from an interruption in the IT systems or revenue loss from falling trading volumes.
Stock trading in India is still considered niche and risky by a large portion of investing public, including people who end up investing in stock markets indirectly through mutual funds. However, the scenario is changing gradually and this is a big positive for players like CDSL.
The company has seen its revenues grow at a CAGR of 3.67% over the past four years with the revenue in FY2016 being Rs 139.4 crore. Just like its revenues, CDSL has seen an uptick in profits as well. Its net profit has grown at a CAGR of 7.59% over the last four years with the FY2016 profits being Rs 74.1 crore. The company’s margins have been are solid and have never dipped below 34% in the last four years. In the latest year, its profitability was at 53.2%. The company credits this strong profitability to its scalable business model.
CDSL has paid dividends regularly to its shareholders in the last four years and considering that BSE will continue to remain the biggest shareholder, this policy is unlikely to change anytime soon. Out of the Rs 74.1 crore, it earned last year, CDSL paid a total of Rs 31.4 crore in the form of dividends. CDSL paid a dividend at the rate of 25% (Rs 2.5 per share) and this was up from 22% in FY2015.