NSDL vs CDSL: Weighing the long-term investment potential

National Securities Depository Ltd's (NSDL's) highly anticipated IPO opened for subscription on Wednesday (July 29, 2025) and will conclude on August 1, 2025. The issue is priced in the range of Rs 760–800 per share. This IPO is a pure offer-for-sale (OFS) of around 5.01 crore shares by existing shareholders, including major names such as NSE, IDBI, SBI, HDFC Bank, Union Bank and SUUTI. The IPO will not involve any fresh capital infusion into the company. Last checked, NSDL commanded a grey market premium (GMP) of Rs 125–130 per share.

Vaibhav Vidwani, Research Analyst at Bonanza, highlighted the valuation gap between India's two central securities depositories -- Central Depository Services (India) Ltd (CDSL) and NSDL. "CDSL, India's only listed depository, currently holds a market cap of around Rs 32,000 crore. In contrast, NSDL's upcoming IPO is expected to value it at roughly Rs 16,000 crore -- a notable discount considering NSDL's much larger scale across key metrics," he said.

As of FY25, NSDL holds securities worth Rs 464 lakh crore, nearly 6.5 times more than CDSL's Rs 71 lakh crore. NSDL also dominates institutional accounts, with over 10.47 lakh non-retail investor accounts compared to CDSL's 2.17 lakh. While CDSL leads in retail demat accounts, NSDL outperforms in revenue efficiency, generating nearly three times more operational revenue per investor.

"NSDL leads in the number of accounts held by investors other than resident individuals (such as corporates, FPIs, and HNIs)," Vidwani noted. "While CDSL benefits from broader retail participation, NSDL's strength lies in institutional flows and its commanding position in the F&O segment. This valuation gap reflects market optimism around NSDL's growth potential and operational robustness, signalling strong demand ahead of the IPO."

NSDL also has a wider corporate reach. As of FY23, about 40,897 companies were linked to NSDL, almost double the 20,323 companies using CDSL. This highlights NSDL's deeper integration into India's capital market infrastructure.

Vidwani further remarked on the recent retail-driven growth, saying, "Post-COVID, a surge of retail investors entered the market, fueling rapid growth for CDSL. This caused a sharp rise in new account openings, particularly in FY22. However, by FY23, this momentum began to taper off. As retail participation stabilises, the market is likely to shift its attention to core fundamentals -- such as revenue per investor and a company's strength with large institutional clients. In these aspects, NSDL holds a stronger position, making it more appealing for the long term."

Krishna Patwari, Founder and Managing Director of Wealth Wisdom India, shared a similar perspective, stating, "In my view, NSDL holds strong long-term investment potential due to its duopoly with CDSL in the vital securities depository segment, solid financial performance, and substantial regulatory importance."

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, stated that CDSL holds the largest share in the retail segment, while NSDL maintains a strong presence on the institutional side. He believes both depositories are attractive from a long-term investment perspective. Bathini recommended subscribing to the NSDL IPO, citing its relatively attractive valuation compared to CDSL, and suggested that investors can consider holding both players given their distinct but complementary roles in the market infrastructure space.