Skip to main content

CDSL IPO

CDSL IPO Analysis

Central Depository Services (India) Limited (CDSL) is entering the primary market on Monday 19 June 2017 with an offer for sale (OFS) of up to 3.52 crore equity shares of Rs. 10 each by BSE, SBI, Bank of Baroda and Calcutta Stock Exchange, in the price band of Rs. 145 to Rs. 149 per share. Listing is expected on 30 June, on NSE alone.
CDSL’s operating profit (before exceptions) stood at Rs. 117 crore in FY17, up 19% YoY, while PAT came in at Rs. 87 crore, leading to net margin of 59%. FY16 reported an exceptional income of Rs. 33 crore.
As of 31-3-17, net worth stood at Rs. 533 crore, translating into BVPS of Rs. 51. Company is debt-free with cash and investments of Rs. 548 crore, or Rs. 52 cash per share. BSE holds 50.05% stake, which will shrink to 24% post issue, in compliance with the provisions of the Depositories Regulations. CDSL has 14 other shareholders including SBI (9.57% pre-offer holding), HDFC Bank (7.18%), Standard Chartered Bank (7.18%), Canara Bank (6.45%), Bank of India (5.57%) and Bank of Baroda (5.07%).    
At Rs. 149 per share, company’s market cap will be Rs. 1,557 crore, with EV of Rs. 1,009 crore. This translates into EV/EBITDA multiple of 8.4x and 7.3x based on FY17 and FY18E earnings, and a PE multiple of 18x and 17x respectively, which is not expensive. Since there are no listed peers, relative valuation comparison cannot be done.
However, on 14 Oct 2016, BSE sold 43.37 lakh equity shares representing 4.15% stake in the company to LIC at Rs. 79 per share. Upper end of Rs. 149 is 89% jump in sale price, in barely 8 months, despite the seller being the same, and FY17 profit growing only in double digit (and not doubling) during this period. While current IPO pricing is a steep premium to last transaction price, based on company’s steady growth and strong fundamentals, IPO valuations, nevertheless, appear fair.
Giving sound fundamentals, sector tailwinds and inexpensive pricing, the issue is a subscribe.

Source: SP Tulsian
Labels:

Comments

Post a Comment

Popular posts from this blog

India: Growth Slow Down (A note on GDP)

Indian economy slowed down significantly in the first quarter of FY2017, which is worst in last three years exactly the same years Modi government is in center. According to recently released data GDP expanded a weak 5.7% annually in Q1 FY 2017, which was sharply below the 6.1% increase in Q4 FY 2016. All those analyst who were forecasting a healthy growth rate now are vanished and our finance minister is accepting that this is a matter of concern. The probable reason of this slow down can be demonetization or implementation of GST. Export growth slowed notably from 10.3% in Q4 FY 2016 to 1.2% in FY 2017, the worst result since Q4 FY 2015. A strong rupee and confusion over the looming implementation of the Goods and Services Tax (GST) likely weighed on the result. There are many evidence in which suggests that firms were not sure of how to price product, with some even providing pre-GST discounts, which likely caused disruption in economic activity. Meanwhile, import growth rose to...
Post a Comment
Read more

Market update 22nd March

Market opened down by almost 70 points taking global cues as US stock sank yesterday. Market is expected to be negative for intraday session although a slight up move in afternoon session can not be ignored but sentiments remains negative.This correction was due in the market and for short term trader 8950 will act as a support for nifty on the another hand sentimental support is of 9000. The trading activity yesterday showed that the foreign portfolio investors (FPIs) sold shares worth a net Rs 1662.72 crore yesterday, 21 March 2017, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 798.57 crore yesterday, 21 March 2017, as per provisional data. 9170-9200 will act as a resistance zone. Stocks which will be in focus today: Dena Bank: Board approves raising of share capital by the bank, amounting to upto Rs 800 crore. Wockhardt: Drug firm, Wockhardt, has received approval from the US heath regulator to m...
Post a Comment
Read more

What Macron’s Win In France Means For Emerging Markets And India

What Macron’s Win In France Means For Emerging Markets And India As result of France’s presidential election has already been announced and Emmanuel Macron won the election defeating Le Pen. Emmanuel Macron is the youngest president in the history of France. As market was expecting the same and the positive rally was already in cashed that’s why market has not reacted unexpectedly after the results. If Le Pen would had won then definitely a sell off rally was expected. Macron has sounded pro-business, consistently talking about labour and tax reforms as well as infrastructure spending. The equity markets love these terms. All French and EU focused businesses are likely to benefit, and there may well be a bit of an up-move in European equities in the first half of the week.  Investors in emerging markets like India would be happy that the EU markets are now unlikely to see some vicious sell-off. This puts the focus back on domestic factors and the local triggers...
Post a Comment
Read more