CDSL stock slide may not be done yet as growth slows and markets stay choppy

Analysts say the move to make dematerialisation of insurance plans mandatory will offer CDSL an opportunity

- Dipti Sharma

The Central Depository Services (India) Ltd (CDSL) stock has shed 29% in the past month. The shares have fallen 16% since the company released its quarterly earnings report on 25 January, raising red flags among investors. Analysts said the slide may be far from over, with more challenges looming on the horizon.

The CDSL stock, which opened at ₹1,270 on Wednesday, trades at a price-to-earnings multiple of 48.28, significantly higher than its 10-year average of 36.46, Bloomberg data showed. Krishna Appala, senior research analyst at Capitalmind Research, said this indicates the stock may have more room to fall.

"A potential risk for CDSL lies in further valuation derating, coupled with a slowing growth trajectory," Appala noted. He said the company's performance remains closely linked to market trends, suggesting that the valuation correction may persist for the next couple of quarters as the market navigates challenges ahead.

HDFC Securities analyst Amit Chandra said the weakness in this segment is expected to slow growth in FY26 following two years of strong expansion because 70% of the company's consolidated revenue is tied to market-linked activities.

"We have cut our revenue estimate by approximately 8% for FY26 and FY27, led by market weakness and EPS estimates by around 13-14% due to the margin drop," he said.