NSDL shares march towards Rs 1,000 mark, up 25% from IPO price; good levels to buy?

Shares of National Securities Depository (NSDL), which made its debut at Dalal Street on Wednesday, August 06, extended its gains in the second straight session as it marched towards Rs 1,000 levels. The stock surged another 6.58 per cent to Rs hit Rs 997.65 mark on Thursday, its day two trading.

Shares of NSDL had settled at Rs 936 on Wednesday, rising 17 per cent over the issue price of Rs 800. The stock made its Dalal Street debut with a premium 10 per cent at Rs 880 but rose another 6.36 per cent for the day. With this, the total gains for NSDL becomes 24.7 per cent over issue price. The total market capitalization of the company is inching close to Rs 20,000 crore mark.

Some market analysts suggest that investors, who have a higher risk appetite and long-term horizon, can buy the stock at current levels with a room to add on corrections in the stock. However, a few others suggest that investors should wait for the correction in the counter amid volatility and enter with a long-term vision.

Kranthi Bathini, Director Equity Strategy at Wealthmills Securities said that investors with a long-term horizon can buy at the current levels, which offer good entry levels, and accumulate on dips in the stock. "Also, one can wait for a euphoria to settle down and pick the stock on dips in the counter," he said.

The IPO of NSDL was open for bidding between July 30 and August 01 as the company raised a total of Rs 4,011.60 crore from its offering, which was entirely an offer-for-sale (OFS) 5,01,45,001 equity shares. The issue was overall subscribed a solid 41.01 times, fetching bids worth Rs 1.15 lakh crore, with nearly 52 lakh applications.

Given the company's established market position, revenue visibility, and the current valuation dynamics, we recommend allotted investors to 'hold' from a long-term investment perspective, said Prashanth Tapse, Senior VP (Research), at Mehta Equities. "For non-allotted investors, a wait and watch approach is advised, as post-listing dips could offer a more attractive entry point."

Going forward, the company plans to use its strength to grow further, improve its IT systems to become more efficient and offer more services, said Master Capital Services, suggesting fresh investment can be done when the price declines.

Incorporated in 2012, NSDL is a SEBI-registered Market Infrastructure Institution, which acts as a securities depository, maintains electronic records of allotment and ownership transfer of securities, provides asset servicing for securities held in dematerialized form, provide services for trade settlement, off-market transfers, pledging of securities, and corporate actions.

Echoing the similar view, Gaurav Garg from Lemonn Markets Desk remains constructive on NSDL, given its leadership in the institutional depository segment and its significant role in offering custodial and depository services to mutual funds, insurers, banks, and foreign portfolio investors (FPIs).

With a robust market position, steady revenue visibility, and reasonable valuations, we recommend a 'hol'd for investors who received allotments, keeping a long-term view in mind. For those who did not receive an allotment, it would be prudent to await a market dip before considering fresh entry, especially amid prevailing market volatility," he said.