NSDL IPO: 10 risks investors should be mindful of ahead of Wednesday's launch
National Securities Depository
(
NSDL
) is set to open for public subscription on Wednesday, July 30, the company has listed risks associated with the IPO in its Red Herring Prospectus (RHP). These risks could potentially impact its business, the company has warned.
10 risks which investors should be mindful of:
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1) Business risks
NSDL, which commenced operations in 1996 as the first securities depository in India, is a market infrastructure institution in the securities market in India. Apart from depository services, NSDL's subsidiaries — NSDL Database Management Limited (NDML) and NSDL Payments Bank Limited (NPBL) — offer a range of services including database management, insurance repository solutions, payment bank operations, payment aggregation, covenant monitoring, and a comprehensive data platform for disseminating information on debt instruments. Hits in any of the above businesses could impact the overall revenues for the company.
2) Revenue concentration from depository services
A significant portion of NSDL's revenue (over 50%) comes from its depository services. Any decline in transaction volumes, demat account growth, or pricing pressure may negatively impact financials.
3) Competition from CDSL and others
NSDL faces stiff competition from Central Depository Services (India) (CDSL) and the latter reported a higher number of demat accounts in 2025 at 15.29 crore versus 3.94 crore accounts of NSDL.
4) Regulatory risks
NSDL and its subsidiaries are governed by regulatory provisions of Sebi, RBI, IRDAI and UIDAI and regulatory changes or company's failure to comply with the regulations of above regulators would impact the businesses.
5) Failure to execute growth strategies
Company's failure to successfully implement its current and future strategic plans and its efforts to expand service offerings and market reach may impact our revenue and growth.
6) Cybersecurity and Data Breach Risks
Being a critical market infrastructure institution (MIIs), NSDL is a potential target for cyberattacks. A breach could result in data loss, regulatory penalties, and investor distrust.
7) Dependency on Technology Infrastructure
NSDL relies on stable and secure tech systems for operations. Any prolonged outage or technological failure can disrupt services and cause market-wide issues.
8) Conflict of Interest
NSDL in its RHP has said that it cannot assure investors that there will not be a conflict of interest between its responsibilities as a securities depository and its shareholders' interests in the company. Its shareholders include NSE and many top banks like
HDFC Bank
,
IDBI Bank
,
Canara Bank
, among others.
NSDL also said that one of its directors, Sriram Krishnan is a director on the board of directors of India International Depository IFSC, which is in the same line of business as NSDL. Any conflict of interest that may occur as a result could adversely affect its business, financial condition, results of operations and cash flows.
Also Read:
NSDL IPO: Issue opens on July 30, here's what you need to know about GMP, issue details
9) Risks involving third-party vendors
The company utilizes the services of certain third-party vendors for its operations. Any deficiency or interruption in their services could adversely affect its business and reputation. For e.g. it relies on complex information technology networks and systems to operate our business.
10) Pending legal proceedings
There are outstanding legal proceedings involving our Company, our Directors, our Subsidiaries and our Group Companies. These proceedings are pending at different levels of adjudication before various judicial authorities, from which further liability may arise.
The depository has fixed the price band at Rs 760–800 per share, with a lot size of 18 shares, amounting to a minimum investment of Rs 14,400 for retail investors. The IPO will be entirely an offer for sale (OFS) of up to 5.01 crore equity shares by existing shareholders, including IDBI Bank, NSE,
Union Bank of India
,
SBI
, HDFC Bank, and SUUTI. NSDL will not receive any proceeds from the offering.
(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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