NSDL IPO: A key player in the stock market infrastructure

30 Jul 2025 , 01:08 PM

NSDL is India’s first and largest depository services player. It owns a significant market share in an industry with structural growth. It has diversified revenue streams, with payments banking accounting for ~50% of its total revenue in FY25.

NSDL IPO of INR 40,116 million is an offer for sale from existing shareholders.

Offer Details of the IPO

Aggregate Offer Size:  Up to 50,145,001 Equity Shares, aggregating upto INR 40,116 million.

Offer for Sale (OFS): The IPO comprises an Offer for sale of shares of various Selling Shareholders, such as:

• IDBI Bank Limited: Up to 22,220,000 Equity Shares
• National Stock Exchange of India Limited: Up to 18,000,001 Equity Shares
• Union Bank of India: Up to 500,000 Equity Shares
• State Bank of India: Up to 4,000,000 Equity Shares
• HDFC Bank Limited (SS): Up to 2,010,000 Equity Shares
• Administrator of the Specified Undertaking of the Unit Trust of India: Up to 3,415,000 Equity Shares

Price Band: ₹760 to ₹800 per Equity Share

Book Running Lead Manager (BRLM)

• ICICI Securities Limited
• Axis Capital Limited
• HSBC Securities and Capital Markets (India) Private Limited
• IDBI Capital Markets & Securities Limited
• Motilal Oswal Investment Advisors Limited
• SBI Capital Markets Limited

Objectives of the IPO

There is no fresh issue of shares and the proceeds of the IPO do not accrue to the company. The IPO is entirely an offer for sale by existing shareholders. This provides liquidity to existing shareholders and provides better visibility to the company.

The IPO is to carry out an Offer for Sale and achieve the benefits of listing on the stock exchanges. The company expects to enhance its visibility and brand image through the listing.

Industry Overview

NSDL has businesses related to multiple industries with a distinct opportunity in each of them. Its key industries include Depository Services, Insurance Repository Services, KYC repository services, IT/ITeS related to database management and Payments Bank.

The depository system industry is an essential part of the overall financial services infrastructure for safekeeping, settlement and transfer of securities. The industry functions as an intermediary between investors and the capital market, facilitating the safe and coordinated custody, transfer and trading of securities. The industry’s customers consist of retail investors, institutional investors, and corporates, who need a safe and efficient method to hold and transact securities.

The depository services business provides dematerialisation, rematerialisation, settlement of securities, and custody & asset servicing by managing clearances of transactions and debts of various players involved in stock and money transactions. The industry contributes significantly to the development of the capital markets, efficient resource allocation and inclusion.

Key Segments within the Industry

The industry for depository system may be classified into two major segments:

Depository Services

This category involves depository services like demat and remat of securities and their settlement. Depository facilitates the holding of securities in electronic form and enables securities transactions to be processed by book entry. The top players in the segment are National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

Custody and Asset Servicing

This is comprised of custody and fund services, where the firm holds and maintains securities and other assets on behalf of clients. Custody and asset servicing allow investors to outsource the administration of their securities, mitigating the risk of securities loss or damage. Custodian Banks and Asset Servicing are the major players in this segment.

These two portions of the depository industry are essential to the expeditious and reliable holding and trading of securities. The industry should be able to maintain this growth moving forward, bolstered by the rising demand for depository services, custody and asset servicing.

Industry Size and Growth Trends

Its depository and allied business have witnessed a sharp growth due to the increased requirement of dematerialised securities and an ever growing investors’ base in the capital market. Total demat accounts witnessed a sharp growth over the past 5 years, especially during the pandemic years. Between 2020 and 2025, total demat accounts witnessed a CAGR of 36%+. In addition to

Key Drivers of Growth

• Strong Structural Drivers: High savings rate, coupled with low penetration of equity-related savings, has led to a structural growth in India’s equity market.
• Higher Investors Base: The growing investor base in the capital markets accentuated by greater financial literacy and awareness has resulted in more and more investors demanding securities in dematerialised form.
• Rising demand for Debt Securities: The demand for debt securities, particularly in the corporate bond market has fueled the growth of the industry.
• Government Initiatives: Various government initiatives like the implementation of T+1 rolling settlement and compulsion of dematerialisation of securities for all private firms has bolstered the sector.

Company Overview

National Securities Depository Limited (NSDL) is one of the two principal depositories in India, the other being Central Depository Services Limited. The company was established by the National Stock Exchange of India Limited (NSE) and the Industrial Development Bank of India (IDBI). NSDL is a group company of the National Stock Exchange (NSE) of India and provides depository services to the participants of the securities market (i.e. investors, issuers and intermediaries) in India.

NSDL has collaborated with entities such as the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), and the Insurance Regulatory and Development Authority of India (IRDAI). It also belongs to the Association of Depositories and is associated with the International Securities Services Association (ISSA).

NSDL has several business lines, which include:

Depository Services

• NSDL offers depository services to both investors and the Capital markets in India.
• The company provides services such as dematerialisation, dematerialisation and pledge services.

Insurance Repository Services

• NSDL has set up an insurance repository to keep any kind of insurance policy in dematerialised form.
• The company has been awarded ISO 27001 certification for information security and ISO 22301 certification for business continuity management systems.

Registrar and Transfer Agent facilities

• NSDL offers registrar and transfer agent services for many types of securities.
• The company has received approval from SEBI for these services.

KYC Registration Agency Services

• NSDL is registered as a KYC Registration Agency with SEBI and enables the intermediaries to make online KYC enquiries and view/download the KYC information using NSDL’s KYC services through different types of interfaces, including the API.

National Skills Registry

• NSDL has rolled out a digital customer onboarding platform for enabling brokers and depository participants to onboard their customers anew.
• It has also established a national skills registry to boost various processes for the IT/ITeS industry.

Payment Bank Services

• NSDL runs a payments bank which provides a wide range of products and services in the banking services, such as digital banking solutions, simple and easy products for ordinary men and women, to drive financial inclusion and growth by being a real partner.

Database Management Services

• NSDL provides database management services, such as e-governance database services, e-governance payment solution and business solutions, collaborations for individual businesses and centralised KYC registry services, insurance repository services and digital banking services.

In a nutshell, NSDL is deeply embedded in the Indian securities scenario with a bouquet of services for investors, issuers, and intermediaries foraying into various activities as a market leader.

Competitive Positioning

NSDL faces multiple competitors in each of its sub-segments. Some of its key competitors include:

• CDSL: Central Depository Services (India) Limited is a major competitor in the depository services market. CDSL is a leading depository in India, providing a range of services including dematerialisation, rematerialisation, and pledge services.
• CAMS Insurance Repository Services: CAMS is a leading player in the insurance repository services market.
• Fino, Airtel, PayTM, Jio, India Post: NSDL faces intense competition from multiple payments banking players for their respective markets.

The company has a strong competitive position in the depository services market, with a large customer base and a wide range of services. The company’s focus on technology and innovation has enabled it to stay ahead of the competition and provide high-quality services to its customers.

• Market Share: The company has a significant market share in the depository services market, with a large number of demat accounts and a wide range of services.
• Service Offerings: The company offers a wide range of services, including dematerialisation, rematerialisation, pledge services, and payment services, which sets it apart from its competitors.
• Technology: The company’s focus on technology and innovation has enabled it to provide high-quality services to its customers and stay ahead of the competition.

Strengths

Diversified Business Model: The company operates a diversified business model, with a presence in multiple sectors, including depository services, payment solutions, collaborative industry solutions, regulatory platforms, KYC solutions, insurance repository services, and digital banking solutions. This diversification helps the company to mitigate risks and increase its revenue streams.

Strong Technology Infrastructure: The company has a strong technology infrastructure, which enables it to provide efficient and secure services to its customers. Its technology platform is scalable, secure, and reliable, which helps the company to handle large volumes of transactions.

Experienced Management Team: The company has an experienced management team, with a deep understanding of the industry and a proven track record of delivering results. The team is led by a Managing Director and Chief Executive Officer, who has over 31 years of experience in the financial services industry.

Weaknesses

Dependence on Regulatory Environment: The company’s business is heavily dependent on the regulatory environment, and any changes in regulations can impact its business. The company needs to continuously monitor and adapt to changes in regulations to remain compliant.

High Employee Costs: The company has high employee costs, which can impact its profitability. The company needs to manage its employee costs effectively to maintain its profitability.

Lower market share with retail customers: Its competitor, CDSL, has a high market share with discount brokers due to lower transaction costs and ease of onboarding. Given the robust growth in this segment, NSDL has lost market share to CDSL in the past few years.

Financial Profile

Revenue Growth Moderated in FY25: NSDL’s depository services business has witnessed a robust growth in the past two years. However, its banking business did not grow in FY25 and impacted the overall growth.

Strong Profit Growth: Despite the moderation in revenue growth in FY25, PAT growth was strong at ~25%. Strong cost control led to better margins and higher growth.

Table: Financial Summary

Particulars	FY23	FY24	FY25
Revenue from operations	10219.88	12682.44	14201.46
Other income	778.26	974.61	1150.41
Total Income	10998.14	13657.05	15351.87
Profit after Tax	2348.1	2754.45	3431.24
Basic and Diluted EPS (₹)	11.74	13.77	17.16
P/E (at upper end of Price Band)			46.62

Source: RHP

 

Table: Segmental Revenue

Segment	FY23	FY24	FY25
Revenue (INR m)
Depository	4,091	4,730	6,186
Banking services	5,408	7,192	7,199
Database management	721	760	816
Total Revenue	10,220	12,682	14,201
As a % of revenue
Depository	40.03%	37.30%	43.56%
Banking services	52.92%	56.71%	50.69%
Database management	7.05%	5.99%	5.75%
YoY Growth
Depository		15.61%	30.77%
Banking services		33.00%	0.10%
Database management		5.42%	7.42%
Total Revenue		24.10%	11.98%

Source: RHP

 

Peer Comparison Tables:

Table: Revenue Comparison

Segment	Players	FY20	FY21	FY22	FY23	FY24	FY25
Depository	National Securities Depository Limited	2,496	3,356	3,693	4,092	4,731	6,186
Depository	Central Depository Services (India) Limited	1,682	2,706	4,148	4,506	6,410	8,482
Insurance Repository	NSDL National Insurance Repository	22	22	23	48	56	47
Insurance Repository	Centrico Insurance Repository Limited	4	4	4	5	7	NA
Insurance Repository	CAMS Insurance Repository Services Limited	209	149	188	178	175	196
KYC Registration Agency	CVL	558	719	1,349	1,029	1,697	NA
KYC Registration Agency	NDML	706	686	927	729	765	823

Source: RHP

 

Table: EBITDA Margin Comparison

Segment	Players	FY20	FY21	FY22	FY23	FY24	FY25
Depository	National Securities Depository Limited	49.14%	60.13%	57.89%	58.11%	59.53%	60.62%
Depository	Central Depository Services (India) Limited	55.09%	68.41%	72.36%	66.23%	66.50%	64.41%
Insurance Repository	NSDL National Insurance Repository	6.89%	(22.05%)	39.06%	40.63%	39.06%	12.32%
Insurance Repository	Centrico Insurance Repository Limited	75.80%	59.66%	53.34%	58.03%	48.20%	NA
Insurance Repository	CAMS Insurance Repository Services Limited	24.95%	16.67%	30.35%	13.29%	4.63%	(14.72%)
KYC Registration Agency	CVL	58.44%	63.14%	66.25%	63.14%	58.44%	NA
KYC Registration Agency	NDML	50.58%	53.05%	61.30%	54.26%	54.58%	51.00%

Source: RHP