The National Securities Depository Limited (NSDL) has finally opened its doors to public investors with a massive ₹4,011 crore Initial Public Offering (IPO) that began subscription on July 30, 2025. This landmark event marks a significant milestone in India’s capital markets, as NSDL becomes only the second depository to go public after Central Depository Services Limited (CDSL) in 2017.
What Makes NSDL IPO Special?
NSDL’s journey to the public markets has been long-awaited, and for good reason. As India’s pioneering depository service, NSDL revolutionized the way securities are held and traded in the country. Since its establishment in August 1996, following the enactment of the Depositories Act, NSDL has been the backbone of India’s dematerialized securities ecosystem.
The company’s IPO comes at a time when India’s capital markets are experiencing unprecedented growth. With demat account penetration at just 13.4% as of financial year 2025, there’s immense room for expansion in this sector. This low penetration rate, compared to developed markets, presents a compelling growth story for depositories like NSDL.
Strong Anchor Investor Interest Shows Market Confidence
Before opening to retail investors, NSDL successfully raised ₹1,201 crore from anchor investors, demonstrating strong institutional confidence in the company’s prospects. The anchor round saw participation from marquee investors including Life Insurance Corporation of India (LIC), which emerged as the largest investor with nearly 1.8 million shares worth ₹144 crore.
Other notable participants included international players like Abu Dhabi Investment Authority and Fidelity Funds, alongside domestic heavyweights such as SBI Mutual Fund, HDFC Life Insurance, and Nippon India MF. This diverse investor base spanning 61 funds reflects the broad appeal of NSDL’s business model across different investment philosophies.
Understanding NSDL’s Business Model
NSDL operates as a market infrastructure institution, providing essential services that keep India’s securities markets functioning smoothly. Think of it as a digital vault where your shares are stored safely in electronic form, eliminating the risks associated with physical share certificates.
The company’s revenue streams are primarily transaction-based, meaning it earns from the various services it provides to market participants including investors, brokers, and companies. This model has proven resilient, with NSDL reporting a robust 24.57% increase in net profit to ₹343 crore for FY 2024-25, while total income grew 12.41% to ₹1,535 crore.
IPO Details That Matter to Investors
The NSDL IPO is priced between ₹760 to ₹800 per share, with the entire issue being an Offer for Sale (OFS). This means existing shareholders are selling their stakes, and NSDL won’t receive any fresh capital from the IPO proceeds. The selling shareholders include major entities like National Stock Exchange of India (NSE), State Bank of India (SBI), HDFC Bank, and others.
Investors can apply for a minimum of 18 shares (one lot), requiring a minimum investment of ₹14,400 at the upper price band. The issue allocation follows the standard format with 50% reserved for qualified institutional buyers, 35% for retail investors, and 15% for non-institutional buyers.
Regulatory Compliance Driving the IPO
An important aspect of this IPO is regulatory compliance. SEBI regulations require that no single entity can hold more than 15% stake in a depository company. Currently, IDBI Bank holds 26.10% and NSE owns 24% in NSDL, both exceeding the permissible limit. This IPO will help these entities reduce their shareholding to comply with regulations.
Analyst Recommendations and Market Outlook
Leading brokerages have generally positive views on the NSDL IPO. Anand Rathi has given a “Subscribe” rating, noting fair valuation at 46.6 times FY25 earnings. Angel One recommends the issue for long-term investors, highlighting the growth potential in India’s expanding capital markets.
Bajaj Broking also supports subscription for long-term investors, emphasizing the significant opportunity presented by low demat account penetration in India. However, analysts have also highlighted several risks including regulatory pressure on pricing, competition from CDSL, and dependence on market activity for revenue stability.
Competition with CDSL: A Duopoly Market
The listing will create an interesting dynamic in the depository space, with both NSDL and CDSL being publicly traded. CDSL shares have already reacted to the NSDL IPO announcement, declining over 1% on the listing day, reflecting investor concerns about increased competition.
CDSL, established in 1999, has built a strong presence especially in the retail segment. As of June 2025, CDSL had over 15.86 crore investor accounts and has been aggressively expanding its market share. The competition between these two depositories could benefit the overall ecosystem through innovation and better services.
Growth Drivers and Future Prospects
Several factors support NSDL’s long-term growth prospects. India’s growing retail investor base, increasing financial inclusion, government initiatives promoting digital transactions, and the expanding mutual fund industry all contribute to higher transaction volumes and account openings.
The digitization of financial services and the growing popularity of online trading platforms have made demat accounts essential for Indian investors. With millions of new investors entering the markets annually, depositories like NSDL are well-positioned to benefit from this secular trend.
Investment Considerations
While the growth story is compelling, investors should consider the risks. The business model’s dependence on market activity means revenues can be volatile during market downturns. Regulatory changes affecting transaction pricing could impact profitability. Additionally, the high valuation at 46.6 times earnings requires careful consideration.
The NSDL IPO represents an opportunity to invest in India’s financial market infrastructure, which has been largely inaccessible to retail investors. For those believing in India’s capital market growth story and comfortable with the regulatory and competitive risks, this IPO could be worth considering for long-term portfolios.
The issue closes on August 1, with listing expected on August 6, giving investors a narrow window to participate in this unique opportunity to own a piece of India’s financial market infrastructure.
