CDSL Stock Falls 9.5% on Weak Q3 Earnings: Key Insights

CDSL Q3 Results: What Went Wrong?

Shares of Central Depository Services Limited (CDSL) saw a sharp decline of 9.5%, hitting a three-month low of Rs 1,358.35 on January 27, 2025. The drop was driven by lower-than-expected Q3 FY25 earnings, disappointing investors and analysts alike. The financials, which missed Street estimates, reflected a slowdown in demat account additions and a decline in sequential profits.

CDSL’s Financial Performance in Q3 FY25

CDSL reported a 21% YoY increase in net profit to Rs 130 crore, compared to Rs 107 crore in Q3 FY24. However, the growth in total income—30% YoY to Rs 278 crore—was overshadowed by a sequential decline in net profit from Rs 161.96 crore in Q2 FY25.

Also read: Cyient’s Q3 FY25 Results: Declining Profit and Revenue Trends

Key financial figures

Metric	Q3 FY25	Q2 FY25	QoQ Change	Q3 FY24	YoY Change
Total Income	Rs 278 cr	Rs 358.51 cr	(-22.5%)	Rs 214.48 cr	(+30%)
Net Profit	Rs 130 cr	Rs 161.96 cr	(-19.7%)	Rs 107 cr	(+21%)
Operating Profit	Rs 124.55 cr	Rs 122.88 cr	(+1.36%)	Rs 80.27 cr	(+55.17%)
Net Profit Margin	58%	60.30%	(-2.2%)	53.90%	(+4.17%)
Demat Account Additions	92 lakh	1.18 crore	(-21.5%)	1.04 crore	(-11.5%)

Despite YoY growth in profits and revenue, the market reacted negatively due to a decline in new demat account additions, which dropped to 92 lakh in Q3 FY25, marking the lowest level since Q4 FY24. This slowdown raised concerns about future growth potential.

Why Did CDSL’s Stock Drop?

Slowdown in new demat account openings: The number of new accounts was significantly lower, dropping from 1.18 crore in Q2 FY25.
Sequential decline in net profit: Even though the YoY numbers were positive, the quarter-on-quarter decline spooked investors.
Market-wide pressure: Capital market stocks were under pressure, with 360 One WAM falling over 6% and Angel One down by 4%.
Concerns over operating leverage: Analysts at Motilal Oswal Financial Services pointed out that ongoing investments in human resources and technology could limit profit margin expansion.
Drop in Demat Custody Value: The total demat custody value fell to Rs 75 lakh crore, further dampening sentiment.

Brokerage and Market Sentiment

What are analysts saying?

Motilal Oswal Financial Services expects EBITDA margins to expand to 65% by FY27, but warns that operating leverage might remain constrained in the near term.
Mandar Bhojane (Equity Research Analyst) suggests that the Relative Strength Index (RSI) at 23.10 indicates oversold conditions, potentially leading to a short-term rebound.
Key support levels are around Rs 1,340 – Rs 1,300, with further downside risk to Rs 1,240 if the trend continues.

Should You Buy, Hold, or Sell CDSL Stock?

With the stock trading below its 200-day EMA, technical indicators suggest a weak short-term outlook. However, long-term investors might find value given CDSL’s dominant position in India’s depository services market.

You also read: Coforge and Persistent Systems Shares Rally After Strong Q3 2025 Results

Pros of investing in CDSL now:

Market leader in India’s depository segment, managing 14.65 crore demat accounts.
Strong revenue growth, up 30% YoY.
EBITDA margins expected to improve in the long run.
Potential bounce-back from oversold RSI levels.

Risks to consider:

Short-term pressure on stock price, as micro-trends in demat account openings impact sentiment.
Operating leverage concerns, with continued spending on HR and tech expansion.
roader market correction, affecting all financial services firms.

Bottom Line

CDSL’s Q3 FY25 results were a mixed bag, with strong YoY profit growth but weak sequential performance. The slowdown in new demat account additions triggered a market selloff, but analysts believe the company has long-term potential. For investors, buying at key support levels (Rs 1,340-Rs 1,300) could be a strategic move, but caution is advised.

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