CDSL Shares Experience Significant Correction After Bonus Issue Announcement

Central Depository Services (India) Ltd (CDSL) shares witnessed a notable correction today, opening at Rs 1,500, which reflects a decline of 48.24% on the National Stock Exchange (NSE). This significant drop follows the company’s trading ex-bonus in a ratio of 1:1.

CDSL’s closing stock price was at Rs 2,898.10 prior to the adjustment. After the stock became ex-bonus, there was a 6% increase, reaching a 52-week high of Rs 1,559. The bonus issue was officially effective today, marking a pivotal moment for the company’s share structure.

As part of this bonus issue, CDSL will issue one free share for every share held by shareholders as of the record date set for August 24, 2024. This move will effectively double the number of CDSL shares in circulation, resulting in a halving of the share price on the NSE. Nevertheless, it is important to note that the market capitalization of CDSL will remain unaffected by this bonus issue.

The CDSL board first announced the bonus share issuance in July of this year. The company plans to distribute a total of 10,45,00,000 equity shares, each with a face value of Rs 10, resulting in an aggregate value of Rs 104.5 crore. This will occur through the capitalization of free reserves, which include general reserves and retained earnings, subject to shareholder approval.

In a filing to the exchanges, CDSL indicated that the record date for this transformative event has been fixed for Saturday, August 24, 2024. During the current trading session, approximately 44.85 lakh shares changed hands, resulting in a turnover of Rs 679.25 crore.

From a technical perspective, the relative strength index (RSI) for CDSL is currently at 75.2, suggesting that it is trading in overbought territory on market charts. Additionally, the company’s board has approved an increase in the authorized share capital, raising it from Rs 150 crore to Rs 300 crore, with an equivalent expansion of equity shares from 15 crore to 30 crore.

CDSL reported a remarkable 82% increase in net profit for the quarter ending June 2024, rising to Rs 134.20 crore compared to Rs 73.57 crore in the previous year. Revenue for the first quarter surged by 72%, totaling Rs 257.38 crore, up from Rs 149.68 crore during the same period last year.

Central Depository Services (India) is a recognized depository registered with the Securities and Exchange Board of India (SEBI). Established to provide secure and affordable depository services to all market participants, CDSL has become an integral player in India’s financial ecosystem.