Shares of Central Depository Services (India) Ltd (CDSL) gained over 6 percent in trade on Tuesday after financial advisory firm Ambit initiated coverage on the stock with a ‘buy’ rating.

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Ambit gave a target price of Rs 1,400 per share on CDSL, hinting at an upside potential of nearly 22 percent from the stock’s previous close of Rs 1,151.65 on the National Stock Exchange on Monday.

Calling CDSL the best play on ‘equitisation’, Ambit said that it is one of the only two central securities depositories in India, which is a Rs 900 crore market. CDSL should grow to Rs 2,000 crore by FY30, it added.

Ambit noted that CDSL has benefited from the increase in retail participation in the Indian capital markets and initial public offerings (IPOs) in the last three years, given strong broker relationships.

Its demat account share has increased to 73 percent at present from 50 percent in December 2019. Further going ahead, the insurance repository could add 30 percent more to its operating revenue.

Ambit expects CDSL’s medium-term revenue/Ebitda growth to be higher at 11/12 percent than 8/6 percent in the pre-Covid period. Ebitda refers to earnings before interest, tax, depreciation and amortisation.

It mainly attributed these expectations to Indian households increasing allocation in equities, growing popularity of mobile investing and equitisation as more companies get listed on stock exchanges.

In a research report dated July 13, 2023, HDFC Securities also issued a bullish stance on CDSL and recommended a ‘buy’ rating on the stock with a target price of Rs 1,470.

CDSL shares on Tuesday jumped as much as 6.3 percent to hit an intra-day high of Rs 1,224 piece on NSE. The stock has gained over 19 percent in the last six months.

Shares of CDSL were trading 5.07 percent higher at Rs 1210.05 apiece at 11:28 AM.