CDSL is an extremely rare company with exceptional fundamental strengths.
CDSL is a depository company, which gets revenue from demat accounts.
CDSL and NSDL are the only two companies in this field, and it is almost impossible for any new competitor to enter this business.
Assured income - Mandatory for clients
Demat accounts are mandatory for investors, so CDSL has a regular source of income from investors as well as from companies that list shares on stock exchange.
Full government Support
Government is strongly encouraging retail investment in financial markets. It is trying to divert unproductive and obsessive investments of Indian public in real estate and gold.
Strong growth in core business
Growth in mutual funds has been phenomenal in recent years, being driven by demonetization, increasing tax accountability, falling returns in real estate, good returns in equities, increasing awareness, and rising income levels. Because of these factors, number of demat accounts are rising sharply (CDSL has over 1.5cr demat accounts, and over 3 million securities!), boosting CDSL income. And still there is a huge growth potential, compared to over 50-60% of people in developed countries having demat accounts, India has a very low level of below 3%.
Equally strong growth from diversification
CDSL is now also offering insurance policies in electronic form which is a very big market. It also offers other online services such as e-voting, e-Locker, National Academy Depository, Electronic Access to Security Information (easi), etc. It has also started digitalization of school and college marks-sheets, which again has a very big growth potential. One massive growth opportunity can come when land records are dematerialized, which this government is very keen to do.
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