CDSL Shares Drop 6% as Standard Chartered Bank Exits in ₹1,712.9 Crore Block Deal

Central Depository Services Ltd (CDSL) faced a downturn in its shares plummeting approximately 6% in early trading after a block deal. The transaction involved the sale of 1 crore shares, constituting a 9.6% stake in the company valued at ₹1,712.9 crore. The block deal, occurring on 27 March, the block deal caught the attention of investors and influenced CDSL's stock performance.

CDSL Block Deal Details

At 9.23 am, shares of CDSL were trading at ₹1,691.30 on the National Stock Exchange. The transaction's parties were initially undisclosed however, it was later revealed that Standard Chartered Bank's corporate banking division was seeking to divest its entire 7.18% stake in CDSL. Standard Chartered aimed to offload its stake in CDSL targeting a minimum gain of $151 million from the deal. The sale was set at a floor price of ₹1,672 per share reflecting a 6.5% discount from CDSL previous day closing price of ₹1,788.90 on the NSE.

After the news of Standard Chartered's stake sale CDSL's share price opened at ₹1,718.55 apiece on the NSE. The block deal involved approximately 1 crore shares representing a 9.6% stake in CDSL with a total value of ₹1,712.9 crore. JP Morgan India Private Limited oversaw the entire selling process on behalf of Standard Chartered.

According to JM Financial research, CDSL stands to benefit from India's robust economic potential and stable political climate. However, despite its promising outlook analysts suggested that the stock remains fairly valued based on its current price to earnings ratio

CDSL Performance & Overview

Established in February 1999, CDSL demonstrated strong financial performance in the December quarter of FY23. Sales surged by 44% to ₹169.5 crore while standalone net profit increased by 37% to Rs 86 crore on an annual basis.

CDSL's impressive returns over the past year with a surge of 90.25% have outpaced broader market indices such as the Nifty Smallcap 250 index which returned 62.7% over the same period. The Indian capital markets favorable conditions further bolster CDSL's growth prospects.

In the December quarter shareholding pattern Indian Mutual Funds collectively held a 12.95% stake in CDSL. Notable funds with include Parag Parikh Flexi Cap Fund, Invesco India Focused 20, PGIM India and Nippon Life. CDSL made its stock market debut in 2017 at an IPO price of ₹149 per share. Since then the stock has faced remarkable growth surging over 10x from its IPO price and gaining 85% over the last 12 months.

To Summarize 

CDSL's recent market activity highlighted by the block deal and Standard Chartered's stake sale highlights the dynamic nature of India's capital markets. Despite challenges CDSL's strong financial performance and investor confidence reflect the company's resilience and potential for future growth.