NSDL IPO: Stock analysts bet on long-term story, some see listing gains too

The initial public offering (IPO) of National Securities Depository Limited (NSDL) is set to open on Wednesday, with several brokerages recommending investors subscribe for long-term gains, citing fair valuations. Some analysts also see potential for a listing pop, not ruling out short-term upside. 

NSDL is India's largest central securities depository, a critical infrastructure institution for electronic securities settlement and custody in the capital markets. The Rs 4,011-crore IPO is being sold in the Rs 760-800 price band.

NSDL’s issuer base is twice CDSL’s with 33,758 issuers and 27.3 Lakh active ISINs as of FY25, Chola Securities noted. "NSDL is being offered at a post-issue PER of 46.6 implying a discount 29 per cent discount to CDSL's 65.7 times. We have issued a “SUBSCRIBE” rating for NSDL’s IPO for listing gain," the brokerage said.  

NSDL’s entrenched market leadership and scale in depository services position it to sustain robust, recurring fee income, even as trading volumes ebb and flow, Arihant Capital Markets noted. 

"Its diversified revenue mix anchored by the rapid growth of NSDL Payments Bank and the steady contributions of NDML will help smooth overall earnings through market cycles. Regulatory moats under SEBI’s framework and the duopolistic structure of India’s depository market underpin durable competitive advantages," the brokerage said.

As India’s digital and financial inclusion agenda accelerates, NSDL is well‐placed to leverage its broad network of participants and cutting‐edge platforms to drive wallet share in digital banking, KYC, insurance repository and e-governance solutions, Arihant Capital Markets said.

At the upper band of Rs 800, the issue is valued at a P/E ratio of 46.63 times, based on a FY25 EPS of Rs 17.16. Arihant recommended a “Subscribe for listing gains” for the issue.

Angel One cited regulatory tailwinds from SEBI, such as shorter settlement cycles (T+1), mandatory demat for unlisted public companies, and increasing digital adoption, which it believes boosting volumes and compliance, benefitting depositories like NSDL.

"Overall, the Indian securities depository segment is poised for long-term expansion supported by capital market deepening, financial inclusion, and policy reforms," it said while suggesting subscribe' to the issue for long-term. 

Among risks, Angel One cited regulatory pressure on transaction pricing, intense competition from CDSL in the retail segment, dependence on market activity for revenue stability, and limited growth capital from the IPO, as it is a pure offer for sale.       

Ventura Securities advised Subscribing to the issue and hold the stock after listing for long term gains.

Bajaj Broking said NSDL is engaged as a pioneer in depository services in India and is an ice breaker for the demat process. "The company is expanding its horizon with more value-added services and options," it said.

Anand Rathi said NSDL would maintain its focus on unlocking growth opportunities and deepening market reach by utilising its core competencies. 

"The company plans to strengthen and modernize its IT infrastructure to improve operational efficiency, elevate service standards, and bolster resilience. Additionally, it aims to broaden its range of services, enhance its database management capabilities, and expand the market share of its payments bank division," it said. The domestic brokearge values NSDL at 46.6 times and said the IPO is fairly priced, recommending a 'Subscribe' rating to the issue.

Ahead of its issue, NSDL raised Rs 1,201 crore from anchor investors. This included Life Insurance Corporation of India (LIC) that subscribed to 12 per cent of the total anchor book. Small Cap World Fund, Ashoka White Oak India Opportunities Fund, SBI Banking & Financial Services Fund and Nippon Life India Trustee were some other anchor investors.