IEX and CDSL – 2 High Quality Asset Light Compounder Business, with Multi Decade Runway of Opportunities
Both the companies are like Toll Collectors on the Growth of Others, both are Asset Light Compounder Business where OPM & NPM are as high as 84% & 71% for IEX (in TTM) and 62% & 52% for CDSL (in TTM) resp. and simultaneously as the CapEx requirement is very low compared to the CFO, hence EBITDA conversion to Free Cash Flow (FCF) is very high in both these companies. IEX in the Short Term Power Contracts has ~ 90.2% Market Share (as in Q2FY23) whereas, CDSL has ~ 71.5% Market Share with 73 mn BO accounts (as in Q2FY23), Both the companies have multiple Tailwinds for Growth, Both the companies have multiple Optionality in their business given so many inherent adjacencies to enter into, Favourable Govt. Policy and Regulation Environment for both the companies that has Triggered multiple avenues for the sustainable higher growth for the multiple decades, Both are the only listed Dominant Monopoly in their respective business, and in spite of all that has been mentioned here, stocks of both the companies have corrected ~ 55% (in case of IEX) and ~ 35% (in case of CDSL) from their all-time high almost a year back.
In this article, we will know how & why all that has happened and what is the future of IEX and CDSL – 2 High Quality Asset Light Compounder Business.
