Central Depository Services Ltd (CDSL) is one of the two depositories operating in
India, which facilitate the holding of securities in electronic form and enable
securities to be processed by book entry. It was originally promoted by BSE, which
subsequently divested part of its stake to leading banks as its sponsors.
Outlook & Valuation: CDSL has a unique business model with high entry barriers
coupled with decent growth prospects. The average ROE for the last six years has
been ~17%, which we believe will sustain going ahead as well. The incremental
capital required for doing business in this space is very minimal and this makes it
an interesting business model. At the issue price band of `145-149, the stock is
offered at 17.7x-18.2x its FY2017 EPS, which we believe is reasonably priced,
and hence, recommend SUBSRIBE to the issue.

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