June 30, 2017 / 4:57 AM / 24 days ago

CDSL soars 80 percent in debut on rosy outlook, little competition

A broker monitors share prices while trading at a brokerage firm in Mumbai May 13, 2014.Danish Siddiqui/Files

MUMBAI (Reuters) - Central Depository Services (India) Ltd (CENA.NS) soared some 80 percent its debut on Friday, as investors flocked to a firm that has just one rival to compete with and robust earnings prospects as the nation's equity markets rack up new highs.

CDSL's stellar debut comes after its IPO raised 5.2 billion rupees ($80.4 million) in India's most heavily over-subscribed offering this year - one that analysts say had been attractively priced.

CDSL, majority-owned by bourse operator BSE Ltd (BSEL.NS), competes with only National Securities Depository Ltd (NSDL) in securities deposit services. It has a 43 percent market share.

"Given the high entry barriers and with not many competitors, I see a lot of growth potential in that area and also expect their earnings performance to be good," said Siddharth Purohit, senior research analyst at Angel Broking.

India's benchmark BSE Sensex has notched up a string of record highs to be up 15.7 percent this year and long-term demand for the firms' services is expected to grow as households shift some savings to financial markets.

Brokerage LKP estimated only around 9 percent of total household savings are invested in financial assets, well below the double digits seen in other countries such as the United States.

CDSL shares were up 77.2 percent at 266.30 rupees by 0737 GMT on the National Stock Exchange, compared with their IPO price of 149 rupees.

Its IPO was over-subscribed by almost 170 times, surpassing the 105 times seen in Avenue Supermarts Ltd's (AVEU.NS) IPO in March.

India's IPO market has boomed this year, with companies raising more than $2 billion so far this year, on pace to match the $4 billion raised in 2016.

Benefiting from a rally in equity and debt markets, CDSL's operating profit jumped 24 percent to 795 million rupees in the year ended in March.

($1 = 64.6500 Indian rupees)

Reporting by Swati Bhat and Samantha Kareen Nair; Editing by Rafael Nam and Edwina Gibbs

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