CDSL jumps 75% on stock market debut
of Central Depository Services (India) Ltd (CDSL) rose nearly 75% on debut on Friday, logging the second-highest listing gains in nearly six years, after its ₹524 crore initial public offer (IPO) received a robust subscription of more than 170 times when it closed earlier this month.
Prior to CDSL, Avenue Supermarts Ltd, which listed on bourses on March 21, had seen a whopping 114.30% gains on the first day. Before these two issues, shares of PG Electroplast Ltd gained 96.02% on listing day on September 26, 2011.
CDSL shares opened 68% higher on the National Stock Exchange (NSE) at ₹250 a piece, compared to the issue price of ₹149, which was the upper end of the price band of ₹145-149 per share.
CDSL shares close 74.97% higher at ₹260.70, while the benchmark 50-share Nifty index closed up 0.18% at 9,520.90 points.
Earlier in the day, the shares had touched a high of ₹269.95 and a low of ₹250.
“The (CDSL) stock was priced attractively, and hence it saw strong listing gains. At this point, it seems to be fairly priced,” said Rakesh Tarway, head of research at Reliance Securities Ltd.
“If an investor has a long-term perspective, this stock is capable of returning 12-14% return annually, due to increasing participation in the financial market,” added Tarway.
The IPO, which was a pure offer for sale, saw the company’s existing shareholders—stock exchange BSE India Ltd, the country’s top lender State Bank of India (SBI), Bank of Baroda and The Calcutta Stock Exchange—sell around 35.16 million shares.
BSE, which sold 27.2 million shares in the IPO, received ₹405.5 crore, while other sellers such as SBI, Bank of Baroda and The Calcutta Stock Exchange will make ₹71.1 crore, ₹32.3 crore and ₹14.9 crore, respectively.
Collectively, these selling shareholders own a 65.65% stake in CDSL.
BSE, which owns a 50.05% stake in the company, will see its stake fall to 24% after the offering. SBI’s stake will drop to 5%.
CDSL serves customers such as depository participants, companies, capital market intermediaries and insurance companies.
BSE Ltd., which was listed on February 2, is up 33.19% from its issue price.
It was the first stock exchange to get listed in India.
According to Amar Ambani, head of research at IIFL Wealth Management Ltd. the BSE stock clearly has upsides from the current level.
“The cash levels act as a cushion. Listing of CDSL also unlocks value,” said Ambani
“BSE’s business is bound to grow, with equities gaining favour as an asset class, compared to earlier times,” added Ambani.
The finance ministry on Friday slashed the interest rates on small savings schemes such as national savings certificate (NSC), Sukanya Samriddhi Account, kisan vikas patra (KVP) and public provident fund (PPF) by 10 basis points for the July-September period, from the rates applicable for the previous quarter.
A finance ministry notification said that rates have been reduced across the board.
However, interest on savings deposits has been retained at 4% annually. Since April last year, interest rates of all small saving schemes have been recalibrated on a quarterly basis.
As per the notification, the PPF scheme will fetch lower annual rate of 7.8 %, while KVP will yield 7.5%.
The one for girl child savings, Sukanya Samriddhi Account Scheme, will offer 8.3% annually, from 8.4% in the first quarter. The investment on 5-year Senior Citizens Savings Scheme will yield 8.3%.
The interest rate on the senior citizens scheme is paid quarterly.
Term deposits of 1-5 years will fetch a lower 6.8-7.6% that will be paid quarterly while the 5-year recurring deposit has been pegged lower at 7.1% .
“On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis,” the ministry said while notifying the rates for second quarter of financial year 2017-18.
While announcing the quarterly setting of interest rates, the ministry had said the rates of small saving schemes would be linked to government bond yields. The move is expected to prompt banks to lower the deposit rate in line with the small savings rate as offered by the government.