NSDL IPO: Will NSDL match peer CDSL’s stock performance?
National Stock Depository Limited has filed its draft red herring prospectus (DRHP) with stock market regulator SEBI to list on stock exchanges, following the footsteps of its listed counterpart, Central Stock Depository Limited (CDSL).
NSDL is one of the two major depositories functioning in India. These depositories are responsible for converting and storing securities such as shares, mutual fund units, bonds, and more into electronic form. Market participants holding shares and having exposure towards mutual funds rely on NSDL to securely hold and manage them.
NSDL IPO: Company Overview
NSDL is a SEBI registered market infrastructure institution (MII) which acts as a custodian for all electronically traded stocks. Following the introduction of the Depositories Act in 1996, NSDL pioneered the dematerialization of securities in India in November 1996.
As of March 31, 2023, NSDL is the largest depository in India in terms of number of issuers, number of active instruments, market share in demat value of settlement volume and value of assets held under custody.
NSDL IPO: Business model:
NSDL generates revenue from three main sources:
- Transaction fees: NSDL charges fees for processing various activities related to the dematerialization and trading of securities, such as dematerialization and transfers of securities.
- Account maintenance/ depository charges: NSDL charges annual maintenance fees for demat accounts held by investors. These fees are for the maintenance of the electronic records and services provided to account holders.
- Corporate actions: NSDL may charge fees for processing corporate actions on behalf of account holders, such as dividends, bonus issues, rights issues, and other entitlements.
NSDL IPO: Details of the issue
The IPO is purely offer for sale (OFS). Through the IPO, NSDL is allowing its existing investors to sell or dilute up to 5.726 crore shares through the issue of equity shares.
Here is a snapshot of NSDL’s existing shareholders and how much shares they are selling:
|Selling Shareholder||Number of shares sold|
|IDBI Bank||2.2 crore|
|HDFC Bank||40 lakh|
|Union Bank of India||56.25 lakh|
NSDL IPO: Industry Analysis
NSDL and CDSL are the only two players currently functioning as the custodians of electronic shares in the country. Since its a duopoly, let’s see how NSDL and CDSL match based on the number of demat accounts held in electronic format over the years.
The number of companies having their securities in demat form have seen an increase from 17,835 in Financial Year 2017 to 40,987 in Financial Year 2023 seeing a growth at 15% CAGR for NSDL and 9,887 to 20,323 from Financial Year 2017 to Financial Year 2023 growing at a 13% CAGR for CDSL.
NSDL IPO: Financial Statement
|Segment||As on March 2023 (Rs in crore)||As on March 2022 (Rs in crore)||% change|
|Total Income||Rs 1099.8||Rs 821||34%|
|Total Expenses||Rs 789.9||Rs 541.6||45%|
|Net Profit||Rs 234.8||Rs 212||11%|
NSDL IPO: Peer Comparison
|Company||Face Value per share||Closing Share price as on Jul 10, 2023||Total Revenue (In Rs crore)||Diluted EPS||P/E Ratio||Net Profit (In Rs crore)|
|NSDL||2||-||Rs 1099.8||11.74||-||Rs 212|
|CDSL||10||Rs1207.25 per share||Rs 620.9||26.41||45.13||Rs 277|
(Data for FY23 ending March 2023)
CDSL: Historic share price performance
(Data as on July 10, 2023)
This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.