The capital market plays are in focus. The domestic brokerage house Axis Capital has turned positive on India’s capital market infrastructure space. The brokerage house, in its report, has identified a select number of stocks across depositories, -registrars and transfer agents (RTAs). The brokerage sees two stocks with up to 26% upside and two others with limited room for upside.
According to the brokerage report, the broader theme remains intact as rising retail participation, increasing mutual fund penetration and a shift towards financialisation continue to support long-term growth.
“Market infrastructure/utility players offer a superior play on Indian capital markets,” the brokerage noted. Let’s take a look at the brokerage outlook and rationale behind these stocks –
Axis Capital’s top capital market infra picks
The brokerage house, Axis Capital has taken a selective approach within the space, assigning ‘Add’ ratings to depositories and ‘Buy’ ratings to RTAs.
Among depositories, National Securities Depository (NSDL) has been given a target price of Rs 1,000, indicating an upside of nearly 7% from the current market price.
Similarly, Central Depository Services (CDSL), on the other hand, has a target price of Rs 1,425, implying a relatively lower upside of about 5.6% from the current levels.
The RTA sector picks appear to offer stronger return potential in comparison to the depositories, as per Axis Capital picks.
KFin Technologies has been assigned a ‘Buy’ rating with a target price of Rs 1,200, suggesting an upside of around 26% from current levels.
Similarly, Computer Age Management Services (CAMS) has a target of Rs 850, translating into an upside of about 16% from the current price.
| Company | Segment | Rating | Target Price (Rs) | Upside Potential |
| NSDL | Depository | Add | Rs 1,000 | ~7% |
| CDSL | Depository | Add | Rs 1,425 | ~5.6% |
| KFin Technologies | RTA | Buy | Rs 1,200 | ~26% |
| CAMS | RTA | Buy | Rs 850 | ~16% |
Why this segment is gaining attention
According to the Axis Capital report, these companies form the backbone of the capital markets ecosystem.
They benefit from structural growth drivers such as rising demat accounts, increasing participation in equities and steady inflows into mutual funds.
“Market Infrastructure/utility players offer a superior play on Indian capital markets,” the report reiterated, adding that these businesses operate with a low-cost model and high margins, typically in the range of 40-50% at the operating level.
The brokerage also pointed out that these companies face relatively lower regulatory risks compared to intermediaries like brokers, as their revenues are more annuity-like and less dependent on market volatility.
Axis Capital on depositories – Stable growth
Depositories like CDSL and NSDL are expected to see steady earnings growth supported by a growing base of investors and transaction volumes. “
Depositories’ earnings on stable expansion path; CDSL outshines,” the report said.
However, the brokerage remains cautious on near-term upside due to factors such as margin normalisation, regulatory pricing pressures and moderation in issuer-led revenues.
Axis Capital on RTAs: In a better position structurally
The brokerage house is more constructive on RTAs, which are closely linked to mutual fund industry growth.
According to the Axis Capital report, “RTAs are best positioned within the capital-market infrastructure given lower regulatory risks.”
These companies benefit from consistent inflows through systematic investment plans (SIPs) and long-term investor participation.
KFin Technologies is expected to see faster growth driven by international expansion and a favourable client mix, while CAMS offers stability due to its dominant presence in the mutual fund servicing space.
“RTAs’ earnings will outpace top line (22% CAGR) as margins gain from operating leverage,” the brokerage added.
Valuations and the future prospects
After recent corrections, valuations across the space have become more reasonable.
“Valuations have turned attractive with recent corrections,” the report said, noting that earlier concerns around growth moderation and regulatory risks are now largely priced in.
Axis Capital expects earnings to grow at a compound annual growth rate of around 15% for depositories and 22% for RTAs over FY26-28.
Disclaimer: Investment in capital market infrastructure stocks involves market risks, including volatility and regulatory changes. The price targets and ratings mentioned are based on third-party brokerage analysis and do not constitute an offer or solicitation by this publication. Readers are advised to consult a SEBI-registered investment advisor before making any financial decisions based on these projections.
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