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CDSL Q1 Review – Lift In Annual Issuer Revenue Is A Positive; Hint Of Cost Increase Ahead Is A Negative: ICICI Securities

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Central Depository Services India Ltd.’s annual issuer charges rose sharply (53% QoQ) while market-linked revenue declined in line with market sentiment (15.6% QoQ). The increase in annual issuer charge was more than expectations and decrease in transaction revenue was lower than expectations setting up a positive revenue surprise (up 2.7% QoQ).

The utility nature of annual issuer charge makes for a good structural earnings lift and is the big positive from Q1 FY23 result. However, management seems to link employee and other costs to the expected business growth / financial performance.

Management believes that investments towards people and technology will enable them to achieve higher growth going forward. Therein is a hint of lower operating leverage which has been the characteristic nature of the company.

The management of cost and revenue growth will be the key earnings determinant for CDSL going ahead.

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