Nationwide Securities Depository Ltd (NSDL), the nation’s oldest and largest depository by worth of belongings underneath custody, is nearing its much-anticipated inventory market debut, with Securities and Change Board of India (Sebi) mandating an inventory by the top of July.
However whereas buyers await readability on the ultimate date, comparisons with its nimbler rival Central Depository Companies Ltd (CDSL) have come into sharp focus, particularly after NSDL’s unlisted shares corrected practically 20% from their 52-week highs, whilst CDSL’s listed inventory rallied 45% over the previous 12 months.
In keeping with Bloomberg, NSDL is predicted to begin taking investor orders as early as subsequent week, with the difficulty dimension scaled again to five.01 crore shares from an earlier proposed 5.73 crore. The IPO, which can elevate as much as $500 million, shall be a wholly offer-for-sale (OFS) challenge from shareholders together with IDBI Financial institution, the Nationwide Inventory Change of India, and State Financial institution of India. NSDL is not going to obtain any proceeds from the IPO.
Institutional depth vs retail velocity
“The NSDL–CDSL divergence is a textbook case of differing enterprise fashions and market positioning,” stated Bhavik Joshi, Enterprise Head at INVasset PMS. “NSDL’s core energy lies in its institutional dominance — with over 89% of India’s demat asset worth underneath custody, and deep integration with mutual funds, insurance coverage companies, and authorities securities.”
Joshi stated, “It additionally holds a robust presence within the unlisted and pre-IPO ecosystem, which is poised for regulatory tailwinds as personal market infrastructure evolves.”
CDSL, against this, has emerged as a retail powerhouse, particularly in the course of the current bull run. “CDSL has emerged because the poster baby for India’s retail financialization. Its nimble tech stack, aggressive pricing, and speedy onboarding have led to a dominant share of retail demat accounts,” stated Joshi. “Traders should distinguish between depth and breadth… CDSL, although extra retail-centric and cyclical, could provide stronger working leverage in upcycles.”
NSDL leads in worth, CDSL in quantity
NSDL leads throughout a number of institutional metrics. As of December 31, 2024, it had 64,535 issuers, greater than double CDSL’s 31,557. It additionally had 63,542 DP Service Centres (DPSCs), in comparison with 17,883 for CDSL. NSDL continues to dominate within the unlisted house as nicely, with 53,169 unlisted firms on its platform, versus 21,295 for CDSL.
In distinction, CDSL’s energy lies within the variety of demat accounts held, 14.65 crore as of December 2024, far outpacing NSDL’s 3.88 crore. Whereas CDSL holds extra accounts, NSDL’s custody worth per account is considerably larger, averaging Rs 1.25 crore per account versus Rs 5 lakh for CDSL.
Unlisted market cools forward of itemizing
Within the unlisted market, NSDL shares have fallen from Rs 1,275 to round Rs 1,025 in current weeks. “The correction in NSDL’s unlisted share value forward of its IPO displays recalibration fairly than structural weak spot,” stated Joshi. “It isn’t unusual for pre-IPO valuations to regulate in response to listed peer benchmarks, altering market threat urge for food, and revised development expectations.”
“In NSDL’s case, the re-pricing appears pushed by three forces: softening investor expectations post-listing euphoria in CDSL, macro-level de-rating in tech-led monetary infrastructure names, and the absence of a contemporary major capital infusion to sign near-term development acceleration,” Joshi defined.
Nonetheless, he believes the long-term outlook stays stable. “If the IPO is priced conservatively relative to CDSL’s present valuations, the drawdown could serve to reset expectations — not undermine fundamentals.”
Fully an OFS: no contemporary capital
The IPO being completely an OFS has additionally prompted questions on promoter intent. “An IPO structured completely as an Provide for Sale (OFS) naturally raises questions on promoter conviction and reinvestment intent,” Joshi stated. “Whereas this doesn’t inherently sign an absence of religion, it does alter the narrative.”
“NSDL is a cash-generating enterprise with a protracted runway of regulatory and ecosystem-driven tailwinds. Its development doesn’t essentially hinge on capital infusion,” he famous. Nevertheless, within the absence of recent capital, “the highlight shifts to governance high quality, working leverage, and dividend coverage.”
NSDL has already knowledgeable shareholders that every one pre-IPO fairness shares shall be locked in beginning July 18, consistent with Sebi norms. MUFG Intime India has been appointed as registrar, and ICICI Securities, Axis Capital, HSBC Holdings, and IDBI Capital are lead managers to the difficulty.
CDSL rally: overdone or justified?
CDSL’s meteoric rise has raised considerations about whether or not valuations have overshot fundamentals. “CDSL’s rally over the previous 12 months mirrors the broader surge in retail market exercise, a secular rise in demat account openings, and increasing use-cases for depositories throughout asset courses,” stated Joshi.
However he cautioned, “A big a part of CDSL’s revenues stays market-linked — from company actions, transactions, and float earnings — all of that are vulnerable to market cycles.”
“If the present rally is pricing in uninterrupted quantity development, report IPO flows, and a persistently bullish retail surroundings, then there’s threat of overextension,” he stated. Nonetheless, long-term structural drivers stay intact, together with SEBI’s push for dematerialisation and broader digital adoption.
Who’s higher positioned for what comes subsequent?
Wanting past the itemizing, the medium-term development alternative for each depositories lies in increasing into new asset courses.
“The subsequent part of development for depositories lies past fairness markets,” stated Joshi. “Medium-term alternatives embrace dematerialisation of insurance coverage insurance policies, academic certificates, sovereign gold bonds, and even tokenised belongings.”
CDSL is more likely to profit extra from the continuing enlargement of the retail investor base, due to its faster onboarding processes, wider integration with companions, and versatile tech structure. NSDL, however, is best positioned to steer on the institutional entrance, significantly in managing complicated asset courses and large-scale recordkeeping, owing to its long-standing relationships and institutional experience, in line with Joshi.
Additionally learn | NSDL IPO set to open quickly: Unlisted share value down 20% from peak. Listed here are 7 issues to be careful for
“Whereas CDSL has the retail velocity and model recall, NSDL brings depth, belief, and compliance energy,” Joshi stated. “The expansion runway is giant sufficient for each to scale — however the market will reward whoever leads the transition from compliance infrastructure to monetary infrastructure utility.”
(Disclaimer: Suggestions, strategies, views and opinions given by the specialists are their very own. These don’t symbolize the views of the Financial Occasions)
Nationwide Securities Depository Ltd (NSDL), the nation’s oldest and largest depository by worth of belongings underneath custody, is nearing its much-anticipated inventory market debut, with Securities and Change Board of India (Sebi) mandating an inventory by the top of July.
However whereas buyers await readability on the ultimate date, comparisons with its nimbler rival Central Depository Companies Ltd (CDSL) have come into sharp focus, particularly after NSDL’s unlisted shares corrected practically 20% from their 52-week highs, whilst CDSL’s listed inventory rallied 45% over the previous 12 months.
In keeping with Bloomberg, NSDL is predicted to begin taking investor orders as early as subsequent week, with the difficulty dimension scaled again to five.01 crore shares from an earlier proposed 5.73 crore. The IPO, which can elevate as much as $500 million, shall be a wholly offer-for-sale (OFS) challenge from shareholders together with IDBI Financial institution, the Nationwide Inventory Change of India, and State Financial institution of India. NSDL is not going to obtain any proceeds from the IPO.
Institutional depth vs retail velocity
“The NSDL–CDSL divergence is a textbook case of differing enterprise fashions and market positioning,” stated Bhavik Joshi, Enterprise Head at INVasset PMS. “NSDL’s core energy lies in its institutional dominance — with over 89% of India’s demat asset worth underneath custody, and deep integration with mutual funds, insurance coverage companies, and authorities securities.”
Joshi stated, “It additionally holds a robust presence within the unlisted and pre-IPO ecosystem, which is poised for regulatory tailwinds as personal market infrastructure evolves.”
CDSL, against this, has emerged as a retail powerhouse, particularly in the course of the current bull run. “CDSL has emerged because the poster baby for India’s retail financialization. Its nimble tech stack, aggressive pricing, and speedy onboarding have led to a dominant share of retail demat accounts,” stated Joshi. “Traders should distinguish between depth and breadth… CDSL, although extra retail-centric and cyclical, could provide stronger working leverage in upcycles.”
NSDL leads in worth, CDSL in quantity
NSDL leads throughout a number of institutional metrics. As of December 31, 2024, it had 64,535 issuers, greater than double CDSL’s 31,557. It additionally had 63,542 DP Service Centres (DPSCs), in comparison with 17,883 for CDSL. NSDL continues to dominate within the unlisted house as nicely, with 53,169 unlisted firms on its platform, versus 21,295 for CDSL.
In distinction, CDSL’s energy lies within the variety of demat accounts held, 14.65 crore as of December 2024, far outpacing NSDL’s 3.88 crore. Whereas CDSL holds extra accounts, NSDL’s custody worth per account is considerably larger, averaging Rs 1.25 crore per account versus Rs 5 lakh for CDSL.
Unlisted market cools forward of itemizing
Within the unlisted market, NSDL shares have fallen from Rs 1,275 to round Rs 1,025 in current weeks. “The correction in NSDL’s unlisted share value forward of its IPO displays recalibration fairly than structural weak spot,” stated Joshi. “It isn’t unusual for pre-IPO valuations to regulate in response to listed peer benchmarks, altering market threat urge for food, and revised development expectations.”
“In NSDL’s case, the re-pricing appears pushed by three forces: softening investor expectations post-listing euphoria in CDSL, macro-level de-rating in tech-led monetary infrastructure names, and the absence of a contemporary major capital infusion to sign near-term development acceleration,” Joshi defined.
Nonetheless, he believes the long-term outlook stays stable. “If the IPO is priced conservatively relative to CDSL’s present valuations, the drawdown could serve to reset expectations — not undermine fundamentals.”
Fully an OFS: no contemporary capital
The IPO being completely an OFS has additionally prompted questions on promoter intent. “An IPO structured completely as an Provide for Sale (OFS) naturally raises questions on promoter conviction and reinvestment intent,” Joshi stated. “Whereas this doesn’t inherently sign an absence of religion, it does alter the narrative.”
“NSDL is a cash-generating enterprise with a protracted runway of regulatory and ecosystem-driven tailwinds. Its development doesn’t essentially hinge on capital infusion,” he famous. Nevertheless, within the absence of recent capital, “the highlight shifts to governance high quality, working leverage, and dividend coverage.”
NSDL has already knowledgeable shareholders that every one pre-IPO fairness shares shall be locked in beginning July 18, consistent with Sebi norms. MUFG Intime India has been appointed as registrar, and ICICI Securities, Axis Capital, HSBC Holdings, and IDBI Capital are lead managers to the difficulty.
CDSL rally: overdone or justified?
CDSL’s meteoric rise has raised considerations about whether or not valuations have overshot fundamentals. “CDSL’s rally over the previous 12 months mirrors the broader surge in retail market exercise, a secular rise in demat account openings, and increasing use-cases for depositories throughout asset courses,” stated Joshi.
However he cautioned, “A big a part of CDSL’s revenues stays market-linked — from company actions, transactions, and float earnings — all of that are vulnerable to market cycles.”
“If the present rally is pricing in uninterrupted quantity development, report IPO flows, and a persistently bullish retail surroundings, then there’s threat of overextension,” he stated. Nonetheless, long-term structural drivers stay intact, together with SEBI’s push for dematerialisation and broader digital adoption.
Who’s higher positioned for what comes subsequent?
Wanting past the itemizing, the medium-term development alternative for each depositories lies in increasing into new asset courses.
“The subsequent part of development for depositories lies past fairness markets,” stated Joshi. “Medium-term alternatives embrace dematerialisation of insurance coverage insurance policies, academic certificates, sovereign gold bonds, and even tokenised belongings.”
CDSL is more likely to profit extra from the continuing enlargement of the retail investor base, due to its faster onboarding processes, wider integration with companions, and versatile tech structure. NSDL, however, is best positioned to steer on the institutional entrance, significantly in managing complicated asset courses and large-scale recordkeeping, owing to its long-standing relationships and institutional experience, in line with Joshi.
Additionally learn | NSDL IPO set to open quickly: Unlisted share value down 20% from peak. Listed here are 7 issues to be careful for
“Whereas CDSL has the retail velocity and model recall, NSDL brings depth, belief, and compliance energy,” Joshi stated. “The expansion runway is giant sufficient for each to scale — however the market will reward whoever leads the transition from compliance infrastructure to monetary infrastructure utility.”
(Disclaimer: Suggestions, strategies, views and opinions given by the specialists are their very own. These don’t symbolize the views of the Financial Occasions)
