Transforming the landscape, NSDL goes to market

The listing of a depository is a rare occurrence in the world of business. And India has the distinction of being the only country, where both its depositories will be listed publicly. One of the most anticipated IPOs in Indian capital market, National Securities Depository Limited (NSDL), will become the second of its kind in the world to list in the first week of August 2025. Its market cap is expected to be in excess of Rs16,000 crore. And, foreign as well as domestic investors are expected to come in droves to be shareholders of it.

NSDL is India’s first and largest depository, pioneering the growth of Indian capital market since 1996. It is a SEBI-registered market infrastructure institution (MII), enabling market participants to partake in the financial and securities market in India.

The institution is supported by a strong governance framework, defined by SEBI and the board, along with robust committees for oversight. It has a strong market share of issuers, active instruments, demat value of settlement volume and value of assets held under custody. Due to diversification, NSDL has higher operational revenue per account. Its base is stable, with a good share of recurring revenues. Also, it has a wide range of service offerings around a demat account, with a strong focus on technology-led product innovation. It has shown consistent growth in revenue, along with a stable margin profile. It has also posted a consistent increase in EPS and net worth. And, it is a debt-free company, with regular payout of annual dividends.

The numbers are staggering – NSDL has a demat custody value of Rs464.2 lakh crore and a market share of 86.8 per cent by total demat custody value. Its market share of individuals and HUFs’ custody value is 67.9 per cent. Also, it has 39.4 million demat accounts, with 100 per cent serviced value of securities among foreign portfolio investors (FPIs). NSDL’s market share by value of listed debt securities is 97 per cent. It has 184,979 active instruments and a 65.2 per cent market share of demat holdings, with an average value of assets held in demat accounts of Rs1.18 crore. The institution has 79,773 registered issuers, with a 69 per cent market share herein. It has a 73 per cent market share by unlisted companies (equity) and 90 per cent market share by demat value – unlisted companies (equity).

Complementary verticals

NSDL has built complementary verticals through its subsidiaries. NSDL Database Management Ltd (NDML) operates as a tech-driven services provider, supporting 1,728 SEBI-registered intermediaries and managing 19 million KYC records through its Central KYC Registry (CKYCR) licence. Meanwhile, NSDL Payments Bank Ltd (NPBL) delivers digital financial products, including prepaid cards, DBT-linked accounts and cash management solutions to corporate and government clients under a B2B2C model, say analysts from SBI Securities in their IPO note.

“We shall continue to focus and prioritise on cyber-security, building capacities, automation and customer experience,” says Vijay Chandok, MD & CEO, NSDL. “And we will continue to focus on growth potential and increase market penetration by leveraging strengths. NSDL will invest and upgrade IT infrastructure systems for enhancement of operational efficiency, service quality and operational resilience. It will diversify offerings and enhance database management business, while also striving to increase market share of payments bank business.”

“NSDL reported a strong financial performance with its revenue/EBIDTA/PAT growing at a CAGR of 17.9 per cent/21.2 per cent /20.9 per cent over the 2022-23 to 2024-25 period, reflecting robust operating leverage,” states an analysts’ report from SBI Securities. The company’s revenue model has largely been stable and annuity-like, with over 60 per cent of its revenue derived from recurring sources, such as annual custody fees charged to issuers and fixed annual DP fees. “These recurring fees are independent of market turnover or transaction volume, providing insulation from market cyclicality,” informs the SBI IPO note. “NSDL also generates revenue from licensing its DPM software, RTA services and other auxiliary offerings”.

NSDL has a strong focus on technology-led product innovation. In August 2007, it became the first depository to introduce instant messaging alerts (over SMS) to investors. The company’s comprehensive suite of value-added services includes Speed-e, which facilitates the electronic submission of depository transactions, STeADY for trade information exchange and institutional client contract notes, and IDeAS, an online platform for convenient access to depository accounts