CDSL Q2 2024 results

Q: What trading pattern has CDSL shown over the past year?

CDSL has formed higher highs and higher lows, indicating an uptrend.

CDSL Q2 2024 Results: Strong Growth in Revenue and Demat Accounts Despite Range-Bound Trading

Shares of Central Depository Services Ltd. (CDSL)https://en.wikipedia.org/wiki/Central_Depository_Services_Limited surged by over 6% in Monday’s trading session, following the release of its impressive September quarter results over the weekend. CDSL’s performance reflects significant gains across multiple key metrics, underscoring its growth momentum in the financial services space.

Revenue and Profit Growth

For Q2 2024, CDSL’s revenue increased by 25% year-on-year (YoY) to ₹322 crore, a substantial rise driven by strong activity across its core services. Additionally, net profit rose by 20.7% YoY, reaching ₹162 crore. This growth in profitability is a positive indicator for investors, highlighting CDSL’s capability to generate stable income.

EBITDA Growth and Margin Expansion

Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) recorded an impressive 29.4% YoY growth, coming in at ₹200 crore. Additionally, EBITDA margins expanded by 200 basis points, reaching 62%. The margin expansion reflects CDSL’s efficiency improvements and stronger pricing power, enhancing profitability for the quarter.

Segment-wise Performance: Depository Activity and Data Entry Business

CDSL’s depository activity revenue also experienced a 25% increase YoY, driven by the surge in demat account activity. Meanwhile, the Data Entry and Storage business posted similar growth, indicating broad-based revenue expansion across the company’s segments.

Record Demat Account Additions

This quarter marked a historic achievement for CDSL as it opened 11.8 million new demat accounts, the highest quarterly addition in its history. The surge in new account registrations takes CDSL’s total demat count to 135 million, reinforcing its leading position in the market.

Technical Analysis and Trading Outlook

CDSL’s stock has shown a strong upward trend over the past year, consistently forming higher highs and higher lows on the weekly charts. High trading volumes have supported this trend, leading to shallow corrections and swift recoveries. However, CDSL’s shares are currently trading within a range-bound zone, with ₹1,350 as strong support and ₹1,650 as resistance.

According to Gaurav Bissa of InCred Equities, the Relative Strength Index (RSI) has been showing a pattern of lower highs and lower lows, suggesting that the stock might continue in a range-bound movement. Bissa advises investors to hold positions but cautions against fresh entries until CDSL’s stock breaks out of its current range.

Current Stock Performance

As of today, CDSL’s shares are trading 5% higher at ₹1,489.1, although still down 10% from its all-time high of ₹1,665. This recent performance reflects strong investor confidence, bolstered by CDSL’s consistent revenue and profit growth despite market fluctuations.

Conclusion

CDSL’s Q2 2024 results reflect impressive revenue and profit growth, along with record-breaking demat account additions. With a robust balance sheet and broad-based growth across its segments, CDSL remains a strong player in the financial services industry. However, the stock’s range-bound trading pattern suggests that investors should exercise patience and watch for breakout opportunities.