CDSL shares slide 13% in one week as NSDL IPO picks pace
Central Depository Services
(India) Ltd have slumped more than 13% over the past week, including a 1.8% dip on Thursday, as investor attention turns to the highly anticipated initial public offering of rival
National Securities Depository
Ltd. With NSDL's IPO opening this week to strong institutional demand, investors appear to be re-evaluating CDSL's premium valuation in light of its larger competitor's public market debut.
India's securities market is witnessing a shift in sentiment as NSDL, the country's first and largest depository, prepares to list on the stock exchanges. Its IPO, which opened on Wednesday, July 30, has already garnered strong institutional interest. Anchor investors subscribed to Rs 1,201 crore worth of shares ahead of the public offering, with grey market activity indicating a listing premium of 15–18%.
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NSDL, incorporated in 1996, has long held a dominant position in institutional custody and infrastructure services. While CDSL gained prominence during the post-pandemic retail investing surge, NSDL's strengths lie in scale, institutional depth, and infrastructure.
'NSDL presents a compelling IPO opportunity, underpinned by its market leadership, robust technology-driven infrastructure, and stable recurring revenue model. With dominant market share and diversified asset coverage, it's well-positioned for long-term growth,' said Saurabh Jain, Equity Head at
SMC Global Securities
.
CDSL's rally cools as retail growth fades
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CDSL's rapid ascent since its 2017 listing at Rs 125 was fuelled by a retail investing boom, particularly in the wake of the COVID-19 pandemic. The stock has returned 165% over three years and is up 21.6% in the last 12 months. But that momentum appears to be tapering off.
On Monday, July 28, shares fell 4% after the company reported a 23.7% year-on-year decline in consolidated net profit to Rs 102.40 crore for Q1 FY26. Revenue from operations rose only marginally by 0.55% YoY to Rs 258.81 crore. Sequentially, net profit was up 2% from Q4 FY25.
With demat account growth now stabilising, investor focus is shifting from topline expansion to profitability, operational leverage, and infrastructure scale, areas where NSDL holds a definitive lead.
Valuation gap
Vaibhav Vidwani, Research Analyst at Bonanza, said that 'CDSL, India's only listed depository, currently holds a market cap of around Rs 32,000 crore. In contrast, NSDL's upcoming IPO is expected to value it at roughly Rs 16,000 crore — a notable discount considering NSDL's much larger scale across key metrics.'
As of FY25, NSDL holds securities worth Rs 464 trillion, roughly 6.5 times CDSL's Rs 71 trillion. It also leads in the number of non-retail investor accounts, with over 10.47 lakh such accounts compared to CDSL's 2.17 lakh. While CDSL has the edge in retail demat accounts, Vidwani noted that NSDL earns nearly three times more revenue per investor, an indicator of its superior operational efficiency.
Vidwani pointed out that NSDL is also the preferred platform for companies looking to hold shares in dematerialised form. As of FY23, around 40,897 companies were linked to NSDL, nearly double the 20,323 associated with CDSL. This suggests NSDL plays a deeper role in the country's capital market infrastructure.
While CDSL's growth has been driven by rising retail participation in recent years, NSDL's strength lies in institutional flows and its dominance in the F&O segment. Vidwani said this contrast in business models explains the current valuation gap and reflects investor confidence in NSDL's long-term growth prospects.
NSDL offers scale, not fireworks
While NSDL's IPO is drawing comparisons to CDSL's multifold rally post-2017, analysts caution against viewing it as a repeat of the same growth cycle.
'After COVID, many retail investors started investing in the market, which helped CDSL grow quickly. This led to a big jump in new accounts, especially in FY22. But in FY23, this growth slowed down. As retail growth starts to settle, the market may start focusing more on core strengths like how much money each investor brings in and how strong a company is with big institutional clients. In these areas, NSDL is stronger, which makes it attractive in the long run,' Vidwani noted.
At the top end of its IPO price band (Rs 800), NSDL is valued at around 47 times FY25 earnings, a discount to CDSL's current price-to-earnings ratio of over 70. The IPO is a pure offer-for-sale and does not involve fresh capital infusion.
For long-term investors seeking exposure to India's capital market backbone, particularly those aligned with infrastructure-led growth over retail momentum, NSDL may be worth a closer look. Meanwhile, CDSL may face short-term pressure as investors reassess valuation premiums in the evolving competitive landscape.
Also read |
Missed CDSL's 1,100% rally? NSDL IPO could be your second chance
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