CDSL, NSDL could see operating profit take a hit due to these developments, analysts warn

The Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of depository services providers like Central Depository Services Ltd. (CDSL) and National Services Depository Ltd. (NSDL) could take a hit, according to analysts who track these companies, after this latest development.According to the latest developments, the KRA Agencies of both CDSL and NSDL have revised their KRA charges. For NSDL, NDML is the KRA agency, while for CDSL, the agency is CVL.

These agencies have revised the Fetch Rate lower for both CDSL and NSDL by 20%. Fetch rate is when a new intermediary, like a broker or mutual fund, fetches or downloads a client’s existing KYC data from a existing registry and pays a fee to the depositories. This is a validation fee and is separate from the initial KYC creation charges.
With the revision of rates, the Fetch Rate is now cut by 20% to ₹28 from ₹35 earlier. Charges for creation of KYC, modification of KYC and status enquiry have also been rationalized.
For companies like CDSL, the CVL KRA constitutes nearly 20% of the overall topline.Brokerages are estimating an impact of 5% to 6% to the EBITDA of these companies due to the rationalization of these charges.

The new charges will take effect from April 1.

Shares of CDSL are down 1.4% on Friday at ₹1,277.1. The stock is down 30% from its recent 52-week high of ₹1,828.

Shares of NSDL are currently trading little changed at ₹919. The stock is down 35% from its post-listing high of ₹1,425 and is back towards its IPO price of ₹800.