Central Depository Services (India) Limited (CDSL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the CDSL Q1 FY '26 Conference Call hosted by HDFC Securities. [Operator Instructions] Please note that this conference is being recorded. Ladies and gentlemen, please note that CDSL does not provide specific revenue or earnings guidance. Anything said on this call, which reflects CDSL's outlook for the future or which could be constituted as forward-looking statements must be reviewed in conjunction with the risks that the company faces. I would now like to hand the conference over to Mr. Amit Chandra from HDFC Securities. Thank you, and over to you, Mr. Chandra.

Yes. Thank you, operator. Good afternoon, everyone. On behalf of HDFC Securities, we welcome you all to the CDSL Quarter 1 FY '26 Earnings Call. Today, we have with us the management team of CDSL represented by Mr. Nehal Vora, MD and CEO; Mr. Shri Girish Amesara, Chief Financial Officer; and other senior leaders from the management team. We will start with a brief overview of the quarter by Mr. Nehal, and then we will open the floor for the question-and-answer session. Thank you, and over to you, Nehal, sir.

A very good afternoon, and welcome, everyone. I hope each of you and your loved ones are safe and healthy. Thank you for joining us today to discuss CDSL's financial results for the final quarter -- for the first quarter of the FY '25-'26. We posted a detailed investor presentation on our website for your reference. I'm joined by the CDSL Group's leadership team. Let me start with the industry highlights and take you through some of the key aspects of our performance. The average daily turnover at BSE and NSE in Q1 FY '26 was at about INR 1.16 lakh crores, a jump of 15% from the last quarter. I'm glad to report that we are close to a count of 20 crore demat accounts as an industry. CDSL saw more than 56 lakh accounts opened this quarter, bringing our total to 15.86 crore demat accounts, maintaining our 79% market share. This is as on June 30, 2025. In order to further the mission of investor education and empowerment, all the depositories have collaborated to introduce a new feature in the respective investor apps, the CDSL's being called MyEasi. This reform enables retail shareholders to access proxy advisory recommendations while voting on company resolutions through the e-voting system. The intent of doing this is to ensure more shareholder activism and more power and tools to each retail shareholders to responsibly vote for their shareholder meetings. This will also enhance transparency in corporate governance standards across the Indian industry. Having access to the proxy advice recommendation will also enable investors to make their informed decisions with confidence. The CDSL Investor Protection Fund also introduced its new awareness platform, a comprehensive online resource made available in English and 11 other languages. This website or a microsite has been designed specifically for investors as a one-stop shop for all the investor education and empowerment concepts, including securities market concepts to encourage responsible investing. The new feature in the investor app and the new website with CDSL IPF has launched were both unveiled by the honorable SEBI Chairperson, Shri Tuhin Kanta Pandey. We invite you to explore both platforms and share them within your circles so together, we can continue building a more informed and engaged investor community. I'm also happy to share that CDSL was recognized with the Innovation and Market Infrastructure award at the Leaders in Custody Asia Awards 2025 by Global Custodian. In June 2025, Mr. Girish Amesara, Chief Financial Officer, was declared as a winner of the FE CFO Award in the Small Enterprises segment under services sector. We are humbled by these recognitions and continue to remain committed to serving the Indian securities market. Before I hand it over to Shri Girish Amesara, Chief Financial Officer, I would like to reaffirm that CDSL's focus remains on enhancing the capital market ecosystem by enhancing efficiency, trust and transparency. We are prioritizing our #Atmanirbhar investor-focused approach while striving for innovation resulting in consistent and sustainable financial and business performance. The market with its ebbs and flows has shown incredible resilience in these last few months, and we owe it to the strong ecosystem who put their constant faith in us. My appreciation and gratitude to all our stakeholders, regulators, depository participants, investors, issuers and the wider ecosystem and last but not the least, the employees of CDSL. Thank you, and over to you, Girish.

Thank you, Nehal. Good morning to everyone. Speaking on the consolidated quarterly performance, the total income for the quarter ended June 2025 is achieved at INR 295 crores as against INR 287 crores for the previous corresponding quarter. The net profit for the quarter ended June 2025 is at INR 102 crores as against INR 134 crores for the corresponding quarter of the previous year. On a stand-alone basis, the total income for the quarter ended June 2025 is at INR 312 crores as against INR 221 crores for the corresponding quarter of the previous year. The net profit for the quarter June 2025 is at INR 152 crores as against INR 105 crores for the corresponding quarter of the previous year. Now I will hand over to Mr. Sunil Alwaris, who will take us through our wholly-owned subsidiary, CDSL Ventures performance. Over to you, Sunil. Thank you.

Thanks, Girish. CVL total income for the three months FY '26 was at INR 42 crores as compared to INR 64 crores for 3 months FY '25. The total expenditure was at INR 26.43 crores for 3 months FY '26 as against INR 26.6 crores for 3 months FY '25. The profit after tax for 3 months FY '26 was at INR 16.4 crores as against INR 37.72 crores. With this, I'll open the floor for the question and answers.

[Operator Instructions] First question is from Ashish Kumar from Ampersand Capital Investment Advisors.

So my first question is on employee expenses. There has been a sharp rise on Q-o-Q basis. So what was the reason for this? And what kind of growth are we expecting for the full year? Second question is on what kind of IT spends are we looking for the full year? And is it going towards any new products or like it is mostly maintenance? Like are we looking for like some innovative products that are coming in the market? So those are my two questions.

So one is at the outset, we don't give forward-looking statements. So I'll restrict my comments to the current expenses and what the overall theme and intent is. See, the 2 important inputs for CDSL as a market infrastructure institution is the technology spend and the human resource spend. So as we are growing in size, and if you -- I would urge you to even look at the market infrastructure institutions regulations, which SEBI has mooted for depositories. There's a separate regulation and for exchanges and clearing corporation. It constitutes into vertical 1, vertical 2 and vertical 3, where the IT and critical operations form a part of vertical 1, regulation risk and control functions form part of vertical 2 and business and others form part of vertical 3. So as per that, the requisite focus needs to be given for continuity of critical operations and technology. And as we are growing in size and sophistication, we need the people to get recruited in all these 3 verticals at the paramount form. Also, the year-end performance appraisal, variable payouts have been reflected in this quarter. So that is the other thing which you will need to factor in. Our intent is to build a more long-term resilient infrastructure institution as I have been saying in all my past investor calls. So it's more of a long-term play which this company is going into -- had been, has been and will continue to embark on. On the technology front, on all the 4 components of infrastructure, applications, security and network is where we are continuously innovating as per the new products which are getting initiated. This is to bring in a lot of nimbleness in our systems, but at the same time, bring in the best-in-class products. So it's a combination of building newer platforms and also enhancing the efficiency and the sophistication of the infrastructure.

The next question is from Mr. Amit Chandra from HDFC Securities.

Sir, my question is on the annual issuer charges. So obviously, we have seen a very sharp jump in the annual issuer charges, both on sequential and Y-o-Y basis. So if you can explain what could be the reason for such a sharp jump here? Is it only increase in the number of retail participants and the folios? Or is it also because of the unlisted revenue, if you can provide some breakup there? And how do we see that like moving because we have been accelerating on that front. So that is my first question. Second would be on the online data side, which is the KYC revenue. This is the third quarter where we are seeing sequential decline and the second quarter where we are seeing Y-o-Y decline. And what is causing this? And is there any measures we are taking to correct this? And if you can give the mix between the KYC creation and such and what is exactly causing the decline here?

Yes. So on the first count, it is mainly on account of increase in folios, which are relevant to the CDSL part as per the framework which SEBI has prescribed on how charges are supposed to be charged to companies. So that will answer your first question. In the unlisted front, while it is a new source, it is kind of really early days in terms of the overall scheme of things. So again, going back to my earlier question that we want to build a strong, resilient long-term business proposition, which is seamless. So I think that when you get more and more people using your platform and then that causes the increase in the overall revenue on a long-term sustainable basis. On the second question, I'll ask Sunil to answer that.

If you ask the percentage of creation and fetch, it's about 85% to about 15%. And the drop in income was primarily because of market conditions where the number of accounts were lower, so which resulted in lower KYC fetches. I hope that answers your question.

Okay. And sir, my last question would be on the cost side. Obviously, you have mentioned about the increase that we have seen in the employee benefit expenses. But from an overall perspective, based on what the new SEBI regulations suggest, where are we in the journey in terms of the over vamp of our cost structure? Is it -- we're going to see similar kind of an investments going further into employee? Or are we invested and we see a steady rise from here in terms of the employee benefit expenses. So I just want to understand in terms of where we are in the journey in terms of the overall that we are doing in terms of the overall restructuring that we're doing internally. And secondly, on the tax rate for this quarter has been on the higher side, if you can explain that?

Yes. So on the first one, we again don't give forward-looking statement, but the ethos is that we currently are in -- overall, the theme which has been laid down in the regulation from a spirit standpoint is being applied. And it's more of building the right platforms to ensure that we are all set for growth as we move forward. And as the overall Indian economy grows, more and more people are expected to join the ecosystem. CDSL is equipped to ensure that it has the right infrastructure and the right people to handle that load. So it's more of a combination of current business operations, coupled with a more long-term planning also so that we are completely in sync with what is expected, supposedly like we see a growth what we've seen about 2 or 3 years ago post-COVID. And that is more of a more proactive planning also, which is going. It's also to ensure that the overall sophistication, which is expected by the wider ecosystem is also adhered to, and we are able to kind of gauge what the requirements are and nimble enough to restructure our infrastructure as and when required. So it brings in a lot of sophistication as we move along. On the tax, I'll ask the CFO to answer.

See, Amit, normally, we receive dividends from our subsidiary companies, okay? And that we take advantage for the purpose of taxation on a stand-alone basis, okay? So when we do a consolidation in the first quarter, wherever there is a dividend increase in stand-alone, the deferred portion of the tax tends to increase in a consolidated level because we are consolidating all companies altogether in consolidation based on the stand-alone taxes. So it's an impact of tax adjustment on account of dividend received from subsidiary company.

Next question is from Uday Pai from Investec.

I just had one question on the KYC front. So there is a newsflash that government is going to revamp central KYC from March 2026. So can you give us some color? Is that beneficial to us? Or how would it impact us, our KYC business?

So see, overall, we'll have to see once the new model is announced. But I think the intent is that the existing KRA system is efficient, is seen by the market. So how it can be leveraged further to enhancing the benefits of that as we move to the next phase of the KYC model. So it's kind of really early days, but I'm fairly sure and certain that the existing benefits of our system will continue -- is at least expected to continue in the new framework also. I'll ask Sunil to add on if he has anything.

Yes. Like just what Nehal said is that we'll be integrating more with the CKYC. That's all we know about it as of now. So as and when it happens we'll know. When we have more detail, we'll be able to tell you what's going to happen going forward.

Sure, sir. Can you just tell me what is the KYC revenue as a percentage of total consol revenue right now?

It is around 33%.

Next question is from Mohit Motwani from Tara Capital.

Yes. I just needed a clarification on the annual issuer charges. So I understand that the revenue for any year is basis the average number of folios in the previous financial year. So can you let us know how does it accrue over the 4 quarters? And does it mean that the addition of issuers in the quarter doesn't contribute much to revenues? If you can just explain that, please?

No. So there are 2 parts of the annual issuer. One is that what is the going concern of which are already listed is based on the past financial year's folios, which is getting billed to the issuers in the beginning of the first quarter. And as on there are new issuances, those will be paid -- will be payable by these issuers to the depositories, both the depositories based on the size, et cetera, as and when it happens. And then in the subsequent financial year, it will then become existing listed company and will follow the framework, which I described earlier.

Sure. And in regards to the IPO corporate action revenues, so we saw a sharp decline sequentially in the number of applications, yet the IPO corporate action revenue didn't see a very sharp decline. So was it like the corporate actions contributed much to the revenues? If you cannot share the numbers, the qualitative sense would be helpful.

Yes. So you can take an estimate that the number of IPOs is anyway out in the public domain and that the remaining would be the corporate actions, which are taken. So it's a consolidated number which is getting reported...

Okay. So corporate action would have contributed more to this quarter revenue. Is that understanding correct?

Yes, means as a percentage as compared to the other quarters, the corporate action percentage contribution to this combined bucket will be more because the number of IPOs are comparatively lower.

Next question is from Vaibhav Sharma from Nuvama Wealth Management.

This is Madhukar Ladha from Nuvama. Sir, just one on the annual issuer charges. Sir, can you give a breakdown of unlisted and listed? And I think in one of the previous calls, you had also mentioned the number of folios, so which was, I think, 22.76 crores for the previous period. So can you also give me the folio count for what you're using in FY '26? Next on employee cost, you mentioned that there is some bonus provision also in Q1. So can you give me the bonus provision number as well? So yes, those would be my two questions.

I'll ask the CFO to answer both the questions.

So the average folio for this financial year is INR 33.26 crores. In bonus provision, normally, we don't give the breakup of the employee cost, okay, in financial results. But it is as per the overall policy that we have implemented at CDSL, which is consistently being followed since last couple of years.

And sir, unlisted charges, sir, how much is that for unlisted company?

Unlisted revenue, I can give for this quarter, it is INR 6.39 crores.

Okay. Okay. And is there any onetime element in the annual issuance charges for -- in Q1?

The application processing fee that we collect is onetime fee, and it is at INR 5.3 crores.

INR 5.3 crores?

INR 5.23 crores.

Next question is from Swarnabha Mukherjee from B&K Securities.

Most of my questions have been answered. I just wanted to understand that this bonus provision that you have mentioned that is unlikely to recur, right? I mean -- or is it like provided over every quarter for the whole year? If you could throw some color on that? And also some data keeping questions, if you could split out the cash income, e-voting income and pledge income for the quarter and any impairment cost?

Sure. I will ask the CFO to answer.

So the provisions are made on a quarterly basis, okay, and it has been consistently followed on accrual concept. In terms of the other income breakup that you want, the income from consolidated account statement is at INR 13 crores, e-voting at INR 6.5 crores. The other part of other income, which has been reported in the investor presentation is largely on account of the investment income, which is at INR 35 crores. Apart from that, we have e-sign and eKYC income of INR 4.5 crores and miscellaneous income of INR 7 crores. This gives the breakup of the consolidated amount mentioned in the investor presentation.

Right, sir. Very helpful. Just one follow-up, sir. You said the unlisted revenue for the quarter is around INR 6.23 crores, right? I mean I think last year -- sorry, sir, can you come back?

I said INR 6.39 crores was the income from unlisted companies.

Okay, sir. So for -- I think in last call, you had mentioned it to be almost about INR 36 crores.

Full year number.

So, full year number. Yes, full year number. So like in case of listed companies, we generally see a stability of the quarterly run rate. Is it any different for the unlisted part?

Basically, this is dependent on the companies who intend to do any transactions in that member index. So as and when there is a requirement at company, they will come to the depository for admitting their security.

Right, sir. But whatever was admitted last year, there we continue to incur, right?

Yes, more or less, yes. They will pay the issuer fees. They will not pay the application fees. Application fees is a onetime fee.

Okay. Okay. Understood. Sir, sir, of last year's INR 36 crores, how much will be the application fee component of that?

It was INR 19.74 crores.

The next question is from Sanketh Godha from Avendus Spark.

For the quarter, it was almost [ 32 ]. So is it fair to say that for the full year, it will back to [ 25 ] at the consol level?

That will be difficult to predict because we don't give forward-looking statements. So it is -- we will have to wait and watch as each quarter unfolds.

Okay. Okay. Got it, sir. And just one thing on KYC. See KYC income, we all know that there is a bit of slowdown in demat account opening incrementally compared to what we witnessed in the past. So is it fair to say that our KYC income will also see a bit of slowdown with the demat account opening slowing down? Or you can see that can be more than compensated by probably [indiscernible] or IPO. So basically, the color what I wanted to understand, sir, is that in KYC income, whether demat account opening contributes the most or MF or something else contribute most in KYC to understand the sustainability of this growth?

Yes. So I think it's a combination. It will be difficult to create specific contributors on a consistent basis. It depends on the market dynamics as well as the environment and how the market as an entire unit is kind of accessing whether it's mutual funds versus demat accounts, fetch versus creation. So there is no specific model or percentage. It depends on each quarter-to-quarter.

Okay. No, sir, the reason why I'm asking is that demat account in general because we already added so many people in the last 5 years is gradually slowing down. So the slowdown will invariably impact [indiscernible]. That's the reason I was asking that question.

Yes. But again, demat accounts slowing down may not only be because a lot of them have added, because a lot of people are using...

Okay. Okay. Got it, sir. Last -- two more. If you can give pledge income data and impairment data for the quarter? And lastly, just again on this employee cost, I mean there is this part is onetime, which is getting reflected in the current quarter or this variable part in subsequent quarters. Because I just wanted to check whether this variable part fully factored in the current quarter or we will see to pay out in next quarter 2?

So the margin pledge income for this quarter is INR 5.05 crores, and there are no onetime costs as far as employee cost is concerned.

No, no, he's asking -- so your question, if I've understood is right that the payout happens in the first quarter, but the accrual for all of that happens equally as per the accounting standards in each quarter. Payout happens for the entire year, like in any other company, variable pay is getting paid out based on the performance at the end of the financial year and is therefore paid out after the financial year ending.

Okay. Understood, sir. And sir, if you can even give me the impairment cost number, which you typically spell out?

It is at INR 3.69 crores.

Sorry, can you repeat, sir?

INR 3.69 crores.

Okay, INR 3.69 crores. And lastly, sir, in the unlisted revenue, which you said is INR 6.39 crores. In that, you are saying application-related income INR 5.23 crores. It's part of that INR 6.39 crores, right, sir?

Yes.

Next question is from Prayesh Jain from Motilal Oswal.

Sir, firstly on -- if I look at your EBITDA margins, we were -- on a consol basis, we are running at 60% thereabouts in most part of last year. And now that it's been at about 50% in the past couple of quarters. Any pricing action or either on issuer charges where you are going back to the regulator for a price hike or for that matter, even transaction charges you plan to increase or anything of that sort that is there in the offering?

So the price for the investors per transaction was that one charge with the circular requires. So that time we had factored in certain economies of scale and made it at INR 3.5. We are about INR 0.50 cheaper than our competition. This is to factor in the economies of scale. And there was an additional INR 0.25 discount given for female investors in the first to encourage sort of diversity in the holdings. For mutual funds and for bonds individually, there's another INR 0.25 discount, again, to kind of encourage more and more people to hold mutual funds and bonds through the demat holding. Issuer charges has been increasing on a periodic basis. As you know, depository charges have to be approved by the regulator. So this is something which is a continuous process work in progress and as we factor in. So as and when the necessary approvals come in, it is -- I would be able to disclose it only once it comes out in the public domain.

So have we applied for it?

See, again, we don't generally discuss our conversation with the regulator in the public domain, confidential. So -- but as and when the process is approved, we will make sure that it is put out in the public domain.

Got that. And sir, any strategy that you can talk about with respect to 3-in-1 accounts, wherein if the ASBA is implemented across various aspects of the business, how well we are or how well we are positioned to kind of do the 3-in-1 accounts for -- particularly for discount brokers?

So I think 3-in-1 accounts is a methodology for each of the CPs to offer. We have the necessary technology KPIs and solutions for them to kind of factor that in. It's a bank account versus demat account. So we are responsible as a depository for the demat account and ensuring that the necessary technology enablements are already in place, and those will continuously be enhanced and made more sophisticated as we move forward. So I think that is the business model of the ecosystem. And as CDSL, I need to play my part as a depository to ensure that the demat side of the business is being properly structured. At the same time, it has necessary connects, technological connects to facilitate any innovation which is required.

How much of this has to be associated with various banks that you or your brokers would have partnered with? So how much involvement is there with respect to building the association with the brokers' bank or the customers' banks?

That you will have to ask those DPs and intermediaries.

We have a limited role.

I can only say about what my business is. So I can only say that it's facilitating ease of doing business in terms of ensuring that the technology enablements are necessary implemented for the process to be smooth.

Got that. And sir, last question on insurance repository. What's happening there? What is your strategy to gain market share in that particular segment now that even LIC has onboarded the various insurance repositories. What is the opportunity? What is the strategy there?

I'll ask Insurance Repository MD, Latesh Shetty, to answer.

Thanks for the question. Yes, LIC integration, there is work in progress. We are expecting the integration to happen soon. Out of the 4 repositories, 3 have participated, and we are one of them. And as far as the overall opportunity is concerned, yes, there is a large number of accounts which are still untapped. So we have gone live with our online opening of account holders, and we are expecting a steady growth there as well. We are anticipating to increase the market share in the coming quarters.

What is the number of policies or e-insurance accounts that we have?

We have crossed 18 lakh policies overall, cumulative.

And e-insurance accounts?

E-insurance accounts is also in the range of 20 lakhs.

The next question is from Devesh Agarwal from IIFL Capital.

Firstly, sir, just wanted to understand on this unlisted space, what would be the total number of companies which are eligible to be converted to be dematerialized? And how much of that would have been done by the end of, say, FY '25 or 1Q FY '26?

So that will be difficult to assess because there are various conditions. Now as and when those conditions get fulfilled, they become very eligible. So there is no fixed number as such because that's dynamic condition. And once the condition gets fructified, they are required to open the demat accounts. So I think make it compulsory demat. So I think that is something which is not fixed for any period of time, et cetera, because condition keeps on changing and evolving.

But can we say that the regulation when they came, a larger number of companies would have converted by now and incrementally companies would convert as and when they require.

No, it will be difficult to assess that because if you -- I think you should read the conditions, then you would -- this question would be answered by itself because there are certain conditions which needs to get fulfilled as to be a large private limited company, they want to transfer or raise capital. So these are all conditions contingent for the demat to happen. Even if I may be a large private limited company, but if I don't wish to raise any capital, I don't want to transfer, then I don't need to make a compulsory demat. So how do I answer that and whether a large number have done or not done. It depends on what they want to do in the future.

Right, sir. And any number, sir, how much companies have actually dematerialized within the unlisted space?

I'll ask the CFO to answer that.

In this quarter, we have admitted 3,486 companies in unlisted space.

In all, sir, outstanding number as on date?

I don't have that number ready, but it would be in the range of 20,000 plus.

Understood, sir. And the other question is, sir, on demat account. Would you say that the proportion of the demat account where there are no folio holdings, that has been increasing in the system or for you over the last, say, 2, 3 years?

No, it's more or less remaining at the same constant percentage. But again, see, people have holdings, then they sell off those holdings, so they become 0. And again, it's a constantly dynamic concept. So I don't think there is any numbers to it. It is more on what the activities and what the intent of the demat holding is.

Right. So it's not that 3 years back, if that number was 10%, today, that has become 20%. That is not the case.

No. More or less. See again, as I have been saying in all my investor calls, we are finally an infrastructure provider. We provide roads. Cars will fly on that road like a normal road as and when there is a value proposition or there's any intent of going from one car to another. That's the process we follow as an overall ethos.

Makes sense, sir. And sir, any number that you could share. What would be the percentage of demat without holding in, say, either FY '25 or 1Q FY '26?

We don't give that number.

Next question is from [indiscernible] Shah from Banyan Tree Advisors.

Sir, two questions. Firstly, from 2014, you can see that CDSL has gained incremental market share in the number of demat accounts as against its competition. And post 2020, it has been able to get the majority market share in terms of demat accounts. So firstly, like what sets you apart from the competition for the discount brokers? Is it the tech or is it the lower cost? My first question is that. And the second question, if you look at the incremental market share in the number of companies getting listed, your competition still has the majority market share in terms of total market share and also incremental market share. So why are issuers still choosing competition over your company? And why is this happening the inverse in demat accounts?

So on the first question on demat accounts, I think this has been the last 5 to 6 years. It has been -- it is a culmination of technology platform, service standards. Also from an infra standpoint, we are a centralized architecture from a cost of holding that infra is lower. There's a variety of measures which has caused this advantage too. On the private limited, it's a process, and we are continuously working towards that why they have been chosen. Only one reason which I can say that over -- historically, ISIN issuance was kind of restricted to only one depository. There are -- it is a work in process that both the depository will now be able to issue the ISIN. So possibly the overall optics would be that you go to the person issuing the ISIN. But I think we've been able to gain more and more companies also as compared to the previous quarters is that we are enhancing our journey in terms of technology and servicing. So more and more people are wanting to come to our platform also.

[Operator Instructions] The next question is from Santosh Keshri from SKK Huf.

Sir, I have one question regarding technology expenses. Like we have been seeing for the past 2, 3 years, technology expenses have been rising. And we also have been seeing that the number of demat accounts have been rising exponentially for CDSL. That's a good thing. But what are we doing to -- we can also see that technology expenses has given rise to a reduction in the EBITDA margin. So are we planning to arrest our EBITDA margin and bring it back to the levels that we saw 2, 3 years back? Or we want to operate on this level only? And the guidance on technology expenses, it may not be futuristic, but we want to know that what is the end plan we have? Is it going to recur forever or it is something that we have reached a plateau and it will go back to 2, 3 years back level?

So I think you need to understand the nature of technology. Technology is something which constantly evolves. And as and when newer technologies will come, I think CDSL aspires to be on -- at least on the sophistication front, ease of doing business and better way of operating. Everything goes through a process of evolution. Our journey has always been that we don't give shocks to the market. It's a constant process of gradual changes which are happening. So it ensures that there is efficiency which is constantly being experienced by the relevant stakeholders. And also, there is a process of innovation which happens because as the number of demat accounts grow, they have to have the necessary technology controls, the technology efficiencies. So to answer your question, I don't think it is basically a start and stop kind of technology expense. It's a constant process of evolution as we embark on a journey. And therefore, there will be constantly a process of evolving this thing. It is like saying your roads, you have a particular road and you build another road as the traffic grows. Again, you keep on maintaining that road with better material. So better technology comes in. So that's the kind of the analogy which needs to be drawn to the technology expense.

Sir, what about the EBITDA margin that we used to enjoy 2 years back. Now that seems to be eroding.

So, I think, I have always gone on my previous interactions also. Our intent is to provide a long-term proposition. Whatever EBITDA we earn, our intent is not to earn a particular EBITDA margin, either high or low. We ensure that the right platform is provided to the market, to the ecosystem and EBITDA margin is the byproduct of that because I think it's -- the intent is the long-term intent to ensure that the value proposition continues to be enjoyed by the ecosystem. And then that will lead to whatever the EBITDA margin is. So I think that is what my take on this.

I do understand that, sir, but I would like to give you a suggestion. Since -- as I have heard you that the depository numbers have increased and that has led to -- and a lot of transaction expenses also have imploded. So maybe we can think of revising or collecting depository charges from our single individual customer, just like a road which is used by customers, motorists, they pay toll charges. So just like that, we should also be looking at this as a business. And rather than becoming a different kind of business, we should be working on full-profit maintainability and look at this from the perspective of what they just require rather than just being a market infrastructure institution, unlike other players. For example, BSE doesn't have so much of technological expenses and they are doing quite well. Hence, didn't have so much. They had an issue, but maybe [indiscernible] expense or maybe look at the recovery of the expense from the depository participants or depository holders. So that's my suggestion. Maybe you can think about it.

[Operator Instructions] Next question is from Prayesh Jain from Motilal Oswal.

Yes. Sir, just a clarification again, sorry on harping on this employee cost front. So in a hypothetical situation, if we are not adding any employees in the remainder of the fiscal, this INR 39 crore quarterly run rate will continue? That is the fair way to think, right?

We don't give forward-looking guidance. So that's the call which you will have to think through. And your hypothesis is also, I think, not fair because employees are going to enter and exit both sides. So it's not going to remain fixed. So I don't think -- in terms of future, we don't give forward-looking guidance. So I'm sorry, I actually would not be able to answer that question.

So if you would have provisioned for INR 100 of variable pay, that will come INR 25, INR 25, INR 25 in 4 quarters. That is a fair way to think?

Yes.

Next question is from [indiscernible] Shah from Banyan Tree Advisors.

Yes, I had a question on the demat value per account compared to your competition. Your competition is far more in terms of the demat value per account. So I'm assuming that they are more of institutional clients and you all have more of retail clients. Would I be correct in assuming that?

I would not be able to comment on what my competition has. I can just say that we present whatever value is there on a fair, transparent basis. It's a combination of institutional, retail holdings which are held with CDSL. And -- so the answer to that question is it is a factual number, whatever the number is.

Okay. So understood. And I'm just trying to understand like what could be the switching cost? Like why would one depository participant decide to choose your company over your competition and decide to change that? Is it the lower cost? Is it the tech enablement? What makes the depository participants to...

I think I have actually answered that in the previous question. That it's a combination. It's the technology, the cost of infra, the services which we give, the technology upgradation, et cetera. So there is no one factor as such. It's a combination.

That was the last question in queue. I would now like to hand the conference over to Mr. Nehal Vora for closing comments.

Thank you so much for all your questions and wish you a very safe and secure life with your loved ones. Thank you. Take care.

Thank you very much. On behalf of HDFC Securities, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.