Management

• Vijay Chandok (Managing Director and Chief Executive Officer)
• Parveen Kumar Gupta (Chairman and Public Interest Director)
• Madhu Sudan Sahoo (Public Interest Director)
• Rajat Moona (Public Interest Director)
• Sripriya Kumar (Public Interest Director)
• Sanjay Panicker (Non-Independent Director)
• Sriram Krishnan (Non-Independent Director)
• Alen Wilfred Ferns (Company Secretary and Compliance Officer)
• Jigar Harshad Shah (Vice President – Chief Financial Officer)

Use of Proceeds

The total issue size is Rs. 4,011.60 crs. The IPO comprises of entirely offer-for sale of existing public shareholders - IDBI Bank, National Stock Exchange, Union Bank of India, State Bank of India, HDFC Bank, and UTI. Hence, all the IPO proceeds will go to these selling shareholders and the company will not receive any offer money.

Competitive Strengths

India’s First and Leading Depository Operating a Wide Range of Technology-Driven Businesses NSDL is India’s first and largest depository, holding the top position in number of issuers, active instruments, market share in demat settlement volume, and assets under custody as of March 31, 2025. It pioneered the dematerialization of securities in India and was among the few globally to implement it directly, bypassing the immobilization phase. NSDL’s scripless book-entry system transformed trade settlements and enabled India’s shift from weekly account-period settlements to rolling settlement cycles. It played a pivotal role in SEBI’s move to T+5 in 1998, T+1 in 2023, and the phased rollout of T+0 for top 500 scrips by January 2025. NSDL also implemented UPI block mechanisms and direct payout facilities, strengthening market efficiency. With over ₹500 trillion in assets under custody and a deep nationwide presence, NSDL remains integral to India's capital markets infrastructure.

Strong Focus on Technology-Led Product Innovation NSDL places technology at the core of its operations, consistently investing in advanced systems to serve depository participants, issuers, registrars, and clearing corporations. It was the first depository to introduce instant SMS alerts for investors in 2007. NSDL has developed several value-added digital platforms such as Speed-e (for electronic submission of depository transactions), IDeAS (for online account access), and STeADY (for trade and contract note exchange). Its innovations include a blockchain-based platform for real-time security and covenant monitoring of debentures, a digital commercial paper issuance platform launched in 2021, and a tax documentation service for dividend payouts. A centralized data processing framework supports master, transaction, and archival data needs. These initiatives reflect NSDL’s continued emphasis on enhancing service quality, transparency, and user experience, reinforcing its leadership in India’s evolving financial infrastructure.

Diversified Asset Classes and Well-Diversified Business Verticals NSDL holds a dominant position in India’s depository market with 85.06% and 86.81% share in terms of number and value of securities, respectively (as of March 31, 2025). Its demat accounts support a wide range of asset classes including equities, debt instruments, mutual funds, REITs, InvITs, and gold receipts. Assets under custody for individuals and HUFs stood at Rs.70.17 trillion, reflecting strong investor confidence. NSDL also benefits from its diversified verticals through subsidiaries NDML and NPBL. NDML offers e-governance, regulatory, and onboarding platforms such as SEZ Online, National Skills Registry, and Instigo, while NPBL has scaled up its digital banking presence with over 2.42 million accounts and strong traction in AePS and micro-ATM services. NPBL contributed over 50% of group revenues in FY25. The combined ecosystem strengthens NSDL’s resilience and positions it as a multi-faceted market infrastructure player.

Stable Revenue Base with High Recurrence and Low Cyclicality NSDL enjoys a stable and predictable revenue base, with a significant portion derived from recurring sources that are less sensitive to market volatility. Key contributors include annual custody fees from issuers and annual fees from depository participants (DPs), which together accounted for nearly 87%–88% of recurring revenues over FY23–FY25. Additional recurring income is generated from annual charges related to services like foreign investment monitoring, IDeAS, DPM software licenses, mutual fund statements, SEZ usage, insurance credit, and RTA solutions. These ancillary services contributed 13.02% to recurring revenues in FY25. As of March 31, 2025, NSDL had 39.45 million demat accounts and 79,773 registered issuers, with per-account operational revenue of ₹156.80 which is significantly higher than its competitor. This diversified and fee-based revenue model ensures long-term financial resilience and supports sustainable profitability across market cycles.

Peer Comparison

Key Risks & Concerns

Risk from Dependence on Market Activity A significant portion of NSDL’s revenue is transaction-based (about 30%) and heavily reliant on trading activity in the securities market, particularly the cash segment. External factors such as investor sentiment, economic cycles, regulatory shifts, and global geopolitical developments directly impact trading volumes. Any downturn in market activity may reduce transaction fees and adversely affect revenue and growth. Additionally, declines in the number of DPs, demat account holders, or issuers could further pressure NSDL’s financial performance and operational stability.

Reliance on IT Infrastructure and Cybersecurity Risks NSDL’s operations are heavily reliant on secure and resilient IT infrastructure. Any disruption due to technical glitches, cyberattacks, or system failures could impact business continuity, attract SEBI-imposed financial disincentives, and damage its reputation. While NSDL follows SEBI-mandated audits, disaster recovery protocols, and has implemented several cybersecurity measures, risks remain due to evolving threat vectors and past disruptions. Moreover, growing regulatory complexity may drive up compliance costs and require ongoing tech investments, potentially impacting margins and operational efficiency.

Intensifying Competition in a Regulated Environment NSDL operates in a tightly regulated duopoly and faces intense competition from CDSL in core depository services across metrics like demat accounts, custody value, and technology offerings. Its subsidiaries, NPBL and NDML, compete with banks, fintechs, KRAs, RTAs, and insurance repositories, many of whom offer aggressive pricing or bundled services. Sustained competitive pressure could impact market share, margins, and growth. Additionally, regulatory complexity may constrain flexibility, and failure to differentiate could adversely affect financial performance and long-term positioning.

Outlook and Valuation

NSDL stands as a key pillar in India’s capital market infrastructure, operating as one of only two securities depositories in the country. The company offers a comprehensive range of depository and value-added services to a vast and growing ecosystem of issuers, investors, intermediaries, and regulators. Its strength lies in its robust technology backbone, product innovation, and a diversified, largely recurring revenue stream, primarily from annual custody and participant fees. As of FY25, it served over 39 million demat accounts and had nearly 80,000 registered issuers, reflecting deep market integration. Financially, NSDL has demonstrated consistent growth, with revenue from operations rising from Rs.1,022 cr in FY23 to Rs.1,420 cr in FY25. Profit after tax grew at a CAGR of 20.82% over the same period, reaching Rs.343 cr, while EBITDA expanded at a CAGR of 22.42% to Rs.493 cr. This sustained performance underscores its resilient business model and strong operating leverage in a regulated yet expanding market.

NSDL is well-positioned to capitalize on India’s evolving capital markets and digital finance ecosystem. With strong tailwinds from rising demat penetration (13.4% in FY25), growing market activity, and increased digital adoption, NSDL’s core depository business is set for sustainable growth. Its Payments Bank (NPBL) has emerged as a key revenue contributor (over 50% of FY25 operational revenue), backed by regulatory push and financial inclusion efforts. Additionally, NSDL’s efforts to onboard new-age fintech brokers and expand ancillary services like e-voting and FILM solutions enhance long-term monetization potential. Stable fixed-cost structures offer strong operating leverage as volumes scale up.

NSDL offers a stable, institution-driven revenue model with limited volatility, supported by annuity-like income streams such as custody and annual issuer fees. While near-term growth may face constraints from moderating transaction volumes and market-linked dependencies, the company’s dominant positioning, deep-rooted institutional relationships, and digital initiatives like payments banking provide strong long-term tailwinds. Its ability to adapt to evolving capital markets and rising demat penetration further enhances its growth potential. NSDL is valued at  47x based on FY25 earnings, calculated based on the upper price band. We recommend a SUBSCRIBE rating for the issue.