CDSL to benefit from market revival

Many people who remain at home during the lockdown have opened new demat accounts and started trading stocks. This has led to significant growth in the business of CDSL, a leading depository body. This, in turn, led to a sharp rise in the share price of CDSL.

The stock price has risen more than 100 per cent in six months. Shares of CDSL fell to Rs.180 following a fall in the stock market in March. The stock is currently trading above Rs.450.

During the April-June quarter of the current financial year, CDSL’s profit grew by 67 per cent. The company had posted a net profit of Rs.46.73 crore for the quarter. CDSLL had posted a net profit of Rs.27.91 crore during the same period last year. Revenue rose to Rs.86.01 crore. The company had posted a net profit of Rs.76.43 crore in the first quarter of last year.

During the lock-down period, there was a significant increase in the number of people starting to invest in stocks. In the last six years alone, about 50 lakh new demat accounts have been opened under CDSL. During the last financial year, an average of three lakh new accounts was opened per month under CDSL. The number of new accounts in January and February was only 90,000. Statistics show that many people who were locked up at home during the lock-down period entered the sector when the downturn in the stock market gave them the opportunity to invest.

Stock Broking is a business that has been running smoothly during the lockdown. The lock-down did not affect the performance of the stock market in any way. The market functioned as usual. Customers who trade stocks online have been able to carry on as usual during the lock-down period. Companies operating under SEBI were exempted from the lock-down. During this time many new investors entered the stock market.

CDSL will continue to benefit from the increasing influx of retail investors into the stock market. Gradual growth in the opening of depository accounts is expected. This will also be reflected in the company’s stock market performance. This is a stock that can be considered for long term investment. It is advisable to follow the step-by-step method of correction.