# 1. Financial Performance ## A. Key Figures * **Total Income:** **₹295 Cr** (Q1 FY'26) (+2.8% QoQ) · **₹287 Cr** (Q1 FY'25) * **Net Profit:** **₹102 Cr** (Q1 FY'26) vs **₹134 Cr** (Q1 FY'25) * **EBITDA Margin:** ~**50%** (recent quarters) vs ~**60%** (prior year) * **CVL Total Income:** **₹43.06 Cr** (Q1 FY'26) vs **₹64.37 Cr** (Q1 FY'25) * CVL PAT: ₹12.71 Cr (Q1 FY'26) vs ₹28.55 Cr (Q1 FY'25) ## B. Revenue Growth * **Trading Activity Strength:** Average daily turnover rose **15% QoQ** to ₹16 lakh crores, signaling robust market participation and volume momentum. * **Revenue Sensitivity:** Growth in investor folios is reshaping fee structures under SEBI’s framework, creating dynamic revenue recalibration. ## C. Profitability Trends * **Margin Compression Intentional:** EBITDA margin decline reflects deliberate reinvestment in technology; management has **no target to restore prior peak margins**. * **Earnings Pressure:** Net profit down significantly YoY despite modest top-line growth, highlighting impact of structural cost investments. ## D. Subsidiary Performance * **CVL Income Drop, Profit Rises:** Despite sharp decline in CVL’s reported income, its PAT increased, suggesting improved cost efficiency or one-time gains. * **Tax Dynamics:** Dividend receipts from subsidiaries create deferred tax liabilities at the consolidated level due to statutory tax adjustments. --- # 2. Fee Income & Revenue Mix ## A. Key Figures * **Annual Issuer Charges Base:** **33.26 Cr** folios (FY26) * **Unlisted Company Revenue:** **₹6.39 Cr** (includes one-time application income) * **Application Processing Fee:** **₹5.23 Cr** (one-time) * **Other Income Breakdown:** **₹13 Cr** account statements · **₹6.5 Cr** e-voting · **₹35 Cr** investment income · **₹4.5 Cr** e-sign/e-KYC · **₹7 Cr** miscellaneous * **Pledge Income:** **₹5 Cr** * **KYC Revenue Mix:** **~13%** of consolidated revenue ## B. Issuer Charges & Pricing Strategy * **Strong Growth in Annual Charges:** Robust sequential and YoY growth driven by rising retail participation and folio expansion, with FY26 revenue based on updated average folio count. * **Revenue Recognition Lag:** New folio additions have limited near-term revenue impact due to annual averaging and even quarterly accruals. * **Competitive Pricing with Incentives:** Investor transaction fees set at **₹50**, **₹50 below peers**, with targeted **₹25 discounts for female investors** and **₹25 for mutual funds/bonds** to drive inclusion. * **Policy Proposal for Cost Recovery:** Management suggests shifting depository charge burden to end-investors, likening it to toll payments, amid rising transaction volumes and costs. ## C. KYC & Application Fees * **KYC Revenue Under Pressure:** Decline attributed to weak market conditions reducing account openings and fetches, with income now representing a stable but volatile **~13%** of total revenue. * **One-Time Nature of Application Fees:** **₹23 Cr** application fee and **₹74 Cr** prior unlisted component are non-recurring, creating potential headwinds for sustained revenue growth. ## D. Unlisted Company Income * **Active Dematerialization Pipeline:** Over **20,000+ unlisted companies** dematerialized to date, with **3,486 admitted in the quarter**, reflecting ongoing regulatory-driven conversion. * **Non-Standardized Eligibility Pool:** Universe of eligible unlisted firms is dynamic, tied to size and capital activity, not fixed, supporting long-term revenue runway. ## E. Other Income Streams * **Corporate Actions Offset IPO Slowdown:** Higher relative contribution from corporate actions amid low IPO activity, maintaining income diversity. * **Diversified Ancillary Income:** Material contributions from investment income (**₹35 Cr**) and account statements (**₹13 Cr**), with smaller but strategic streams in e-voting and e-KYC. --- # 3. Cost Structure & Expenses ## A. Key Figures * **Total Expenditure (CVL):** **₹30.35 Cr** Q1 FY'26 · **₹35.82 Cr** Q1 FY'25 (-15.2%) * **Employee Cost Run Rate:** **₹39 Cr** per quarter (current) * **Variable Pay Provisioning:** **₹100 Cr** annualized, accrued at **₹25 Cr** per quarter ## B. Employee Costs * **Sharp QoQ Increase in Payroll:** Employee expenses rose significantly due to year-end performance payouts and broad-based hiring across IT, risk, and business functions, despite prior-year high base. * **Cost Discipline Amid Expansion:** Total CVL expenditure dropped 57% YoY, indicating structural cost optimization even as CDSL scales and meets regulatory mandates. * **No Fixed Forward Run Rate:** Management refrained from confirming a stable employee cost trajectory, citing dynamic hiring and attrition patterns. ## C. Technology Spending * **Sustained Tech Investment:** Technology expenses reflect a multi-year, continuous evolution strategy focused on platform resilience, operational efficiency, and non-disruptive innovation. * **Strategic Over Financial Prioritization:** Spending is aligned with long-term market infrastructure integrity, not short-term cost containment, and is expected to persist. --- # 4. Customer & Account Metrics ## A. Key Figures * Demat Accounts: 15.86 Cr total (CDSL) · 79% market share (as of Jun-25) * **New Demat Additions:** **56 Lakh** in Q1 FY26 (CDSL) * Insurance Repository Policies: 18 lakhs cumulative ## B. Demat Account Growth * **Slowing Account Ramp-Up:** Demat account growth has moderated versus prior years, which may pressure **KYC-related income** despite continued high absolute additions. * **Resilient Market Leadership:** CDSL maintains dominant position with majority market share since 2020, underpinned by **centralized infrastructure** and **lower holding costs** for participants. ## C. Folio & Market Share * **Stable Inactive Base:** Proportion of Demat accounts with zero folio holdings remains steady, reflecting consistent investor behavior and market participation trends. * **Structural Competitive Edge:** Sustained share gains since 2014 driven by **technology platform superiority** and **consistent service delivery** over the past 5–6 years. ## D. Retail vs Institutional Mix * **Lower Value Per Account:** Inquiry raised on comparatively lower value per account, potentially due to **higher retail client concentration** versus peers with larger institutional books. * **Transparent Reporting:** Management affirms fair and accurate disclosure of value per account, representing a genuine mix of **retail and institutional holdings** without peer comparisons. --- # 5. Product & Platform Initiatives ## A. MyEasi App Features * **Enhanced Shareholder Engagement:** MyEasi app now provides retail investors access to proxy advisory recommendations during e-voting, promoting informed decision-making and stronger corporate governance. * **Investor Education Expansion:** CDSL IPF launched a **multilingual awareness platform** in **12 languages**, serving as a one-stop resource for investor education and market literacy. * **Leadership Endorsement:** New app features and IPF platform unveiled by **SEBI Chairperson**, underscoring regulatory support for investor empowerment. * **Tech Infrastructure Scaling:** Rising Demat account volumes are driving continued investment in technology controls and operational efficiency. ## B. 3-in-1 Account Readiness * **Proactive Integration Planning:** Company assessing readiness for 3-in-1 account model, particularly in context of ASBA rollout and applicability to discount brokers. * **CDSL Tech Preparedness:** CDSL has already deployed **APIs and technical solutions** for the Demat component of 3-in-1 accounts, with enhancements ongoing. * **Defined Role in Ecosystem:** CDSL’s responsibility limited to enabling the Demat segment; full 3-in-1 implementation requires coordination across brokers, banks, and depositories. --- # 6. Regulatory & Structural Risks ## A. Regulatory & Structural Risks * **Headline:** Company aligning with the **spirit of new SEBI regulations** on cost structure, though no forward-looking statements are provided. * **Headline:** Depository and issuer charges require regulatory approval and are subject to ongoing review; changes disclosed only post-approval. * **Headline:** Upcoming **CKYC revamp (March 2026)** under evaluation, with expectations that current KRA system benefits will transition into the new framework. * **Headline:** KRAs expected to integrate with new CKYC system, though specifics remain pending and clarity will emerge closer to implementation. * **Headline:** **ISIN issuance now open to both depositories**, ending historical monopoly, with CDSL gaining traction in onboarding new issuers. * **Headline:** Depository switching decisions driven by **multi-factor considerations**, including technology, service quality, and infrastructure costs. * **Headline:** Competitive differentiation emphasized through **integrated technology and service efficiency**, shaping issuer preference. --- # 7. Guidance & Outlook ## A. No Forward-Looking Guidance * **No Financial Guidance Provided:** CDSL does not offer specific revenue, earnings, or console-level outlook; all forward-looking statements are qualified by risk factors. ## B. Technology Investment Continuity * **Sustained Strategic Investment:** Commitment to long-term investment in **human resources and technology** to strengthen infrastructure resilience, despite absence of forward-looking expense guidance.