CDSL Shares Drop 48% on NSE Due to Bonus Issue: What Investors Need to Know
News Mania Desk/Agnibeena Ghosh/23rd August 2024
Shares of Central Depository Services (India) Ltd (CDSL) have experienced a significant correction of 48.24% on the National Stock Exchange (NSE) today, opening at Rs 1,500 after closing at Rs 2,898.10. This sharp decline is attributed to the stock adjusting for a bonus issue, which has caused the price to nearly halve. Despite this correction, the stock has seen a subsequent rise of over 6%, reaching a 52-week high of Rs 1,559 on the NSE.
The recent price adjustment is linked to CDSL’s decision to issue bonus shares, effective today. The bonus issue, announced by the company’s board in July, involves issuing one additional share for every share held by shareholders as of the record date, August 24. This move effectively doubles the number of CDSL shares in circulation while halving the stock price on a pro-rata basis. Importantly, the overall market capitalization of the company remains unchanged by this bonus issuance.
In detail, CDSL will distribute 10,450,000 equity shares, each with a face value of Rs 10, amounting to a total value of Rs 104.5 crore. These bonus shares will be distributed from the company’s free reserves, including general reserves and retained earnings, subject to shareholder approval. The bonus issue will increase the company’s share capital to Rs 209 crore.
According to a filing with the exchanges, the company had set August 24, 2024, as the record date for the bonus issue, in accordance with Regulation 42 of the SEBI Listing Regulations. The bonus shares are expected to be issued within two months from the board approval date, which means they should be distributed by September 1, 2024, at the latest.
During today’s trading session, CDSL saw 44.85 lakh shares change hands, with a turnover of Rs 679.25 crore. The stock has a beta of 0.9, indicating relatively low volatility over the past year. Technical indicators show that the Relative Strength Index (RSI) for CDSL stands at 75.2, suggesting that the stock is in the overbought zone on the charts.
In addition to the bonus issue, CDSL’s board also approved an increase in the company’s authorized share capital from Rs 150 crore, divided into 15 crore equity shares of Rs 10 each, to Rs 300 crore, divided into 30 crore equity shares of Rs 10 each.
Financially, CDSL reported an impressive 82% increase in net profit for the quarter ending June 2024. The profit surged to Rs 134.20 crore, up from Rs 73.57 crore in the same quarter of the previous year. Revenue for Q1 also saw a significant rise of 72%, reaching Rs 257.38 crore compared to Rs 149.68 crore in the corresponding period last year.
Established as a depository registered with SEBI, Central Depository Services (India) Ltd aims to offer secure and efficient depository services to market participants at an affordable cost. The recent bonus issue and subsequent stock price adjustment reflect the company’s ongoing efforts to enhance shareholder value and market liquidity.
