Is NSDL IPO worth your money?

Summary: Thinking of applying for the NSDL IPO? The country’s largest depository enjoys a dominant position in a tightly regulated duopoly and handles securities worth a staggering Rs 464 trillion. But its heavy reliance on trading volumes and pressure from payments bank arm are key risks that deserve closer scrutiny. We break them down in the full story below.

NSDL IPO will open for subscription on July 30, 2025 and close on August 1, 2025. The issue from the pioneer of India’s demat revolution is a complete offer for sale (OFS), where existing shareholders are offloading over five crore shares.

We break down NSDL’s business model, financial track record, strengths and risks to help you make an informed decision.

What the company does

NSDL is India’s first and largest depository by asset value, operating in a duopoly alongside CDSL. It plays a central role in India’s capital markets by keeping investors’ securities safe in demat form, maintaining ownership records and ensuring seamless transfer and settlement after each trade. It handles a wide range of securities: listed/unlisted shares, mutual funds, bonds, REITs, InvITs, alternative investment funds and more.

NSDL also runs adjacent businesses through its subsidiaries: NDML handles KYC utilities, regulatory platforms and e‑governance systems, while NSDL Payments Bank provides financial inclusion services such as money transfers, micro-ATMs and basic banking products.

Past track record and valuation

Over the past three years (FY23–FY25), NSDL has maintained steady growth and healthy return ratios. Revenue expanded at an annual rate of 18 per cent, while net profit rose 21 per cent per year. Return on equity averaged 17.6 per cent and ROCE 23 per cent.

At the upper price band of Rs 800 per share, the IPO values NSDL at 47 times FY25 earnings and 8 times book value. On both metrics, it is priced below CDSL (its only competitor), which trades at a P/E of 64.3x and a P/B of 17.1x.

The good

NSDL’s leadership position in a tightly regulated, high-barrier market gives it significant competitive advantages:

• Scale and dominance: It is by far the largest depository in India, holding Rs 464 trillion worth of securities in demat vs CDSL’s Rs 70.5 trillion as of March 2025. Its expansive network of depository participants (banks, brokers, other financial institutions) who together run 65,391 service centres, three times the size of CDSL’s, provides wide reach.
• Institutional-heavy client mix: The average value of assets per demat account at NSDL is Rs 1.17 crore, compared with just Rs 4.6 lakh at CDSL. This tilt towards institutional clients allows higher monetisation per account and greater resilience during market downturns.
• Dominance in debt markets: NSDL holds a commanding 97 per cent market share in dematerialised debt securities by value, backed by long-term institutional flows.
• High entry barriers: NSDL and CDSL are the only two SEBI-registered depositories in India. New entrants need significant capital, deep technology integration and market-wide connections, which has kept the industry a two-player duopoly since the 1990s.

The bad

Despite its advantages, NSDL faces structural challenges that could impact future performance:

• Revenue dependence on market activity: NSDL leans heavily on activity‑linked fees. Around 80 per cent of FY25 revenue came from transaction‑based charges, while recurring fees (annual custody/maintenance) accounted for the rest 20 per cent. That means a prolonged market slowdown can pull down revenue noticeably.
• Payments bank drags profitability: NSDL Payments Bank contributes nearly half of group revenue but lags on profitability. In FY25, it posted a poor operating margin of 0.5 per cent and ROE of just 1.3 per cent, pulling down overall profits.
• Weaker retail presence: NSDL dominates the industry by asset value but CDSL takes the lead in the number of demat/beneficial owner accounts at 15.3 crore, led by retail investors, versus NSDL’s 4 crore. A larger retail base means CDSL earns higher annuity-style recurring revenues (such as from AMCs) than NSDL whose revenue is majorly sourced from institutional trades.
• Limited pricing flexibility: Being a regulated market utility, NSDL cannot freely increase fees or introduce new charges without SEBI approval. This limits its ability to offset cost pressures or lean trading cycles.

So, should you apply for the NSDL IPO?

NSDL plays a critical role in India’s capital markets and benefits from its scale, high entry barriers and institutional-heavy client base. But investors should weigh the risks carefully: this IPO is a pure OFS, meaning the company itself will not receive any proceeds. Its payments bank remains a drag and the revenue model is tied closely to market activity, while CDSL remains a formidable competitor. 

Moreover, IPOs come with scant operating history in the public markets and little clarity on how a company will perform once listed. It's wiser to observe how a stock behaves post-listing and assess it with a few quarters of performance behind it.

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