NDSL commenced operations in 1996 as the first securities depository in India and pioneered the dematerialization of securities in India following the introduction of the Depositories Act in 1996. It offers a wide range of products and services to the financial and securities markets in India. It has a network of 65,391 depository participants service centres as compared to 18,918 such centres with CDSL.

NSDL plays a central role in developing products and services that will continue to address the growing needs of the financial services industry in India. Using innovative and flexible technology systems, NSDL works to support investors, brokers, issuers and other market participants in the Indian capital markets. The focus is on ensuring the safety and soundness of the Indian securities market by developing settlement solutions that increase efficiency, minimize risk and reduce costs.

NSDL facilitates securities of various asset classes to be held in digital form by investors in accounts known as Demat Accounts held with the company through depository participants. The various classes of securities held in dematerialized form includes equities (listed equity and unlisted equity), preference shares, warrants, funds (mutual funds, REITs, InvITs and AIFs), debt instruments (corporate debt, commercial paper, certificate of deposit, pass through certificate, security receipts, government securities, sovereign gold bonds, municipal debt, treasury bill) and electronic gold receipts.

As part of depository business, NSDL operates a centralized digital bookkeeping system that facilitates the holders of securities to transfer their securities in electronic form and enables settlement solutions in an efficient and cost-effective manner. It also facilitates and maintains complete records of the ownership of securities held in dematerialized form on behalf of the issuer entity. The depository services are provided to investors, issuers, depository participants, financial institutions, stockbrokers, custodians, clearing corporations and other market intermediaries and have established an ecosystem for these entities to integrate with its systems.

The depository services provide a steady source of recurring revenue, primarily through annual custody fees charged to issuers of securities and annual maintenance fees charged to depository participants in relation to corporate accounts serviced through depository platform. A standardized fixed fee is charged per annum for each corporate account. The transaction fees are charged to depository participants and issuers of securities for transactions effected through depository system.

NSDL has leveraged technological infrastructure to cater to the diverse needs of the securities market in India and introduced several additional products, e-services and ancillary value-added services and initiatives directly and through subsidiaries, NSDL Database Management (NDML) and NSDL Payments Bank (NPBL), thereby emerging as a key enabler for the financial market in India. Through its Subsidiaries, NSDL offers a range of IT-enabled solutions through multiple verticals such as e-governance, payments solutions, collaborative industry solutions, regulatory platforms, KYC solutions, insurance repository services, digital banking services, amongst others.

NSDL payments bank business, NPBL was launched in October 2018. NPBL operates on a business-to-business-to-consumer (B2B2C) model and offers digital banking solutions, inclusive banking products, prepaid cards, merchant acquisition services and the distribution of third-party products such as life insurance, health insurance and mutual fund schemes.

NSDL has over 39.45 million active demat accounts held and accounts holders were in more than 99.34% of pin codes in India and 194 countries across the world. The number of issued jumped by 33,758 issuers in FY2025 to 79,773 issuers at end March 2025 from 46,015 issuers at end March 2024. NSDL serviced 99.99% of the value of equity, debt and other securities held by foreign portfolio investors in dematerialized form in India

NSDL held assets in custody aggregating to Rs 70.17 lakh crore for individuals which constituted 67.90% of the total value of such assets under custody in dematerialized across depositories at end March 2025. It also held assets aggregating to Rs 4.67 lakh crore for non-residents Indians, constituting 85.56% of the total value of such assets held by non-residents. NSDL also had a market share of 96.98% of the dematerialized value of debt securities in custody aggregating to Rs 52.2 lakh crore.

Objects of the Offer

The initial public offer (IPO) consists entirely of offer of sale of 5.01 crore equity shares to raise Rs 3811 crore at the lower band of Rs 760 per share (face value Rs 2 per share) and Rs 4012 crore at the upper band of Rs 800 per share.

Among the major selling shareholders, IDBI Bank has offered 2.22 crore equity shares for sales, National Stock Exchange of India 1.80 crore equity shares, State Bank of India 0.40 crore equity shares, Administrator of the Specified Undertaking of the Unit Trust of India 0.34 crore equity shares, HDFC Bank 0.20 crore equity shares and Union Bank of India 0.05 crore equity shares.

The company is a professionally managed company and does not have an identifiable promoter.

The listing of the company is in-line with the regulatory requirement necessitating the principal Shareholders, IDBI Bank holding 26.1% stake and National Stock Exchange of India at 24%, to dilute their shareholding in Company before 14 August 2025 below 15% as required under the SEBI D&P Regulations.

Strengths

NSDL is India‘s first and leading depository operating a wide range of technology-driven businesses. It is the largest depository in India in terms of number of issuers, number of active instruments, market share in demat value of settlement volume and value of assets held under custody.

NSDL holds a strong position in the depository market with regard to the diversified asset classes held in demat accounts. It has a significant market share in terms of total securities in terms of numbers held in demats at 85.06% and 86.81% in values. The higher custody value allows it to leverage a range of additional services, including pledges, margin pledges and loan against security (LAS).

In addition to the core depository services offered, NSDL offers various other services through Subsidiaries, NDML and NPBL.

NSDL has consistently invested in technology, enabling the development of a state-of-the-art depository system catering to diverse user groups such as depository participants, issuers, registrars, transfer agents, and clearing corporations. It has helped to expand service capabilities, enhance user experience, and continue to remain relevant in the financial and securities market in India.

NSDL has robust IT infrastructure, risk management frameworks and cyber-security measures focused on ensuring the safety and integrity of the depository system

The business model provides a stable revenue base and a significant proportion of recurring revenue. Revenue from annual fees and annual custody fees is considered as a more stable and recurring source of revenue due to its lesser dependence on market cycle compared to revenue from transaction charges.

Weaknesses

The revenue from depository business contributes 43.6% of total revenues. The revenues may be impacted due to the general investment climate in India. Any significant change in investor preferences from trading in securities to other avenues could reduce demand for services of the company.

The success depends on the ability to develop and introduce new products and services to the securities market in India through technology-based solutions that anticipate and keep pace with rapid and continuing changes in technology, industry standards and preferences of investors.

A significant portion of business is transaction-based and is dependent on external factors such as the level of trading activity, investor sentiment, economic conditions, and regulatory changes. A decline in trading activity could reduce transaction fees, which forms a significant portion of revenue stream at 29.9%.

Complex information technology networks and systems are key to operating business. Any significant system or network disruption due to a technical glitch, breach in the security of IT systems or otherwise, could have a negative impact on business.

The business depends on depository participants to be able to provide services to investors and holders of securities and rely on the continuing growth of these relationships to increase the number of customers availing depository services from these depository participants.

Compliance with current or future privacy and data protection laws may lead to higher compliance and technology costs and could restrict ability to provide certain products and services such as products or services that involves sharing personal information with third parties or storing personal information.

The business is subject to higher penalties and settlement amounts as a market infrastructure institution and may be required to contribute a higher percentage of profits to the Investor Protection Fund. NSDL is required to contribute 5% or percentage as may be specified by SEBI of net profits to the Investor Protection Fund every year. Any hike in this percentage may result in lower distributable profits and dividends for shareholders.

The business operates in a rapidly changing tech environment.

The payments bank business involves high operating expenses leading to a high cost-to-income ratio and incurred losses in the past.

The company had higher employee attrition rate of 23.23% in FY2025

The rapid emergence of new age fin-tech brokers and non-adaptation of NSDL system and its services by these new age fin-tech brokers could result in a significant loss of potential business and market share.

Valuation

NSDL is the largest depository in India in terms of number of issuers, number of active instruments, market share in demat value of settlement volume and value of assets held under custody at end March 2025. The company has an established track record of growth in revenue and profits. Revenues grew at a 2-year CAGR of 18% to Rs 1420.15 crore in FY2025 from Rs 1021.99 crore in FY2023. PAT grew at a 2-year CAGR of 21% to Rs 343.12 crore in FY2025 from Rs 234.81 crore in FY2023.

EPS on post-issue equity for FY2025 works out to Rs 17.1. At the price band of Rs 760- 800, P/E works out to 44.5-46.9 times of consolidated EPS for FY2025.

CDSL is the only listed peer and competitor of the company. CDSL is trading at PE of 61.2 times the consolidated EPS for FY2025.

At the higher price band of Rs 800, NSDL is demanding m-cap of Rs 16,000 crore. The m-cap of CDSL is at Rs 32234 crore.

NSDL has strong share of 86.6% in terms of demat custody value, while CDSL has significant share in demat accounts at 79.7% at end June 2025. CSDL has demat accounts base of 15.86 crore and NSDL as 4.05 crore.

NSDL has generated revenues of Rs 1420 crore for FY2025 and CDSL has recorded lower revenues of Rs 1082 crore. However, the PAT margins of CDSL were higher at 48.7% as against 24.2% for NSDL leading to higher net profit for CDSL at Rs 526.64 crore compared with Rs 343.12 crore for NSDL.

In terms of return ratios, the ROE of NSDL was at 17.1% for FY2025, while RoE of CDSL was strong at 37.9%.