NSDL’s Upcoming Rs.3,000 Crore IPO Amid Market Slowdown: 4 Key Insights to Know

After a strong run last year, IPO activity in India’s primary markets has tapered off, with no mainboard listings in the past three weeks amid a correction in the secondary market. However, investor interest remains high, with several anticipated public issues—notably, the recently announced NSDL IPO. 

If investing in this IPO is what you are considering too, here are four details to know about this upcoming IPO and the company to help you make an informed decision. 

NSDL IPO Details

Face Value	Rs. 2 per share
Total Issue Size (in Shares)	5,72,60,001 shares
Total Issue Size (in Rs.)	Rs.3000 crore
Issue Type	Book Building IPO
To be listed on	BSE

The upcoming NSDL IPO, valued at an estimated Rs.3,000 crore, will be a complete Offer for Sale (OFS) of 5.72 crore equity shares. Major stakeholders, including IDBI Bank Limited, National Stock Exchange (NSE), State Bank of India (SBI), HDFC Bank, and Union Bank of India, will offload their shares as part of the offering. 

While the offer price is yet to be announced, the issue will be structured across different investor categories, with not more than 50% of the net offer allocated to Qualified Institutional Buyers (QIBs), of which 60% is reserved for anchor investors. At least 15% of the net offer will be available for Non-Institutional Investors (NIIs), while Retail Individual Investors (RIIs) will have access to at least 35%.

Objectives of NSDL IPO

NSDL aims to utilize the IPO proceeds to strengthen its market presence, expand its user base, and enhance operational resilience. The company’s strategy is centered around:

• Increasing Market Penetration: NSDL plans to attract new investors by growing its network of depository participants, including new-age brokerage firms. It also offers technology-driven incentives such as API integrations and volume-based fee structures.
• Expanding Depository Services: The company is working to simplify processes for holding various asset classes in dematerialized form, such as sovereign gold bonds, mutual fund units, and private securities.
• Enhancing Investor Participation: Through initiatives like ‘Market Ka Eklavya,’ NSDL actively promotes awareness and accessibility in capital markets.
• Strengthening Technological Infrastructure: A strong focus on IT infrastructure ensures seamless operations, scalability, and security, including blockchain-based offerings for security monitoring.
• Diversifying Offerings: NSDL is expanding its payments bank business by integrating services such as digital payment cards, zero-balance accounts, mutual fund investments, and insurance products.
• Source: DRHP

Know More on  SEBI Registered Investment Advisory 

NSDL Company Overview

Established in 1996, National Securities Depository Limited (NSDL) is India’s first and largest central securities depository, playing a crucial role in the country’s financial market infrastructure. In Mumbai, NSDL facilitates electronic holding and securities settlement, eliminating the risks and inefficiencies of physical paper-based transactions.

NSDL provides services to investors, stockbrokers, custodians, and issuer companies through its extensive network of depository participants. NSDL has revolutionized how securities are traded, settled, and held in India with a seamless and secure system for dematerializing securities. 

Revenue generation for NSDL primarily comes from custody fees charged to issuers, maintenance fees from depository participants, and transaction fees for facilitating securities transfers. Additionally, NSDL operates through its subsidiaries- NSDL Database Management Limited (NDML) and NSDL Payments Bank Limited (NPBL)- expanding its offerings beyond traditional depository functions. Over the years, NSDL has continued to innovate, introducing new products and services, including blockchain-based solutions, e-voting, and digital payment services, further strengthening India’s securities market ecosystem. Source: Annual Report

Company Finances:

NSDL’s Total Revenue

NSDL’s revenue from operations grew by 17.73% in FY 2023-24, reaching Rs.571.10 crore compared to Rs.485.5 crore the previous year. This increase is largely driven by the surge in demat accounts across India, fueled by greater market participation, rising investor interest, and regulatory mandates promoting dematerialization. 

As the country’s largest depository with a dominant position in the securities depository space, NSDL benefits from the prevailing high transaction volumes.

Net Profit

NSDL has demonstrated consistent profitability, with an average net profit of Rs.2,369.61 crore over the last three financial years. In FY 2023-24, the company reported a net profit of Rs.2,580.76 crore, reflecting a 22.4% increase from Rs.2,108.19 crore in FY 2022-23. This growth is attributed to rising demat account registrations, increased transaction volumes, and expanding market participation.

NSDL Payments Bank recorded a Profit After Tax (PAT) of Rs.1.58 crore among its subsidiaries. NSDL Database Management Limited (NDML) reported a PAT of Rs.35.47 crore, contributing to NSDL’s overall financial strength. 

Other Facts to Know Before NSDL IPO

NSDL has a significant presence in India’s Foreign Portfolio Investors (FPI) segment, with 11,200 registered FPIs representing 99.99% of FPI holdings. This highlights its role in managing foreign investments in the Indian capital markets.

As of FY 2024, NSDL’s net worth is Rs.1,509 crore, and its debt-to-equity ratio is nil, indicating a debt-free financial position. Plus, the company’s Net Profit Ratio is 54.6%.

The NSDL IPO presents an opportunity to invest in India’s largest securities depository, which is crucial to the country’s financial infrastructure. With a steady increase in revenue, profitability, and market participation, NSDL continues expanding its offerings and technological capabilities. 

However, as with any investment, factors such as market conditions, industry trends, and individual risk appetite should be carefully evaluated. So, conduct thorough research and review the company’s financials and growth prospects before making an investment decision. Source: Annual Report

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