National Securities Depository Limited (NSDL) is India's largest securities depository and forms a critical pillar of the country’s financial market infrastructure. The highly anticipated NSDL Initial Public Offering (IPO) is set for launch in 2025 and has generated significant interest among investors eager to own a stake in the backbone of India’s dematerialized securities system.

Key NSDL IPO Details

The issue is split between Qualified Institutional Buyers (50%), retail investors (35%), and Non-Institutional Investors (15%).

What is NSDL?

Founded in August 1996, NSDL pioneered dematerialized securities in India, transforming the way investors hold and trade stocks, bonds, and other instruments. As of March 2025, NSDL:

• ▫️Services more than 39.5 million active demat accounts

• ▫️Operates via 294 Depository Participants (DPs)

• ▫️Reaches over 99% of India’s pin codes and 186 countries

• ▫️Maintains clear market leadership by value of assets under custody

Financial Performance

NSDL has posted consistent growth:

• ▫️Revenue increased from ₹1,366 crore in FY24 to ₹1,535 crore in FY25 (up 12%)

• ▫️Profit after tax (PAT) rose from ₹275 crore to ₹343 crore (up 25%)

• ▫️Diluted EPS improved from ₹9.43 to ₹11.74 in recent years

• ▫️Return on Net Worth (RoNW) remains strong at 16.4%, slightly down from 18.5%

• ▫️Asset/liability management remains robust

Offer for Sale: Who Is Selling and How Much Will They Make?

In this IPO, all proceeds go directly to existing shareholders—it’s a complete Offer for Sale. The major sellers include State Bank of India (SBI), National Stock Exchange of India (NSE), IDBI Bank, HDFC Bank, Union Bank of India, and SUUTI (Specified Undertaking of the Unit Trust of India). These institutions are set to realize substantial profits, reflecting the value created by holding NSDL shares over the long term.

For example, SBI initially acquired its shares at ₹2 each and will now receive ₹800 per share through the IPO, generating gains of nearly 400 times its investment. IDBI Bank and SUUTI also entered at ₹2 per share, making similarly impressive profits. The NSE, which bought at ₹12.28 per share, will earn about 60 times its initial cost. HDFC Bank, a later entrant at ₹108.29 per share, will see its investment more than double. Union Bank of India, with shares acquired at ₹5.20, will realize over 150 times its cost. These outcomes demonstrate the extraordinary returns that long-term institutional shareholders in NSDL stand to gain from the IPO, turning modest early investments into hundreds of crores in profit.

Rationale and Market Position

NSDL stands as India’s first and largest depository—significantly bigger than its main competitor CDSL in terms of value and active account base. Its role is critical: NSDL powers virtually every dematerialized (demat) transaction and settlement in Indian capital markets, backed by advanced technology and strong regulatory credentials. Its nationwide reach, robust brand, and status as a SEBI-registered market infrastructure institution provide a substantial competitive moat.

Risks and Challenges

While NSDL’s market position is formidable, investors should be aware of:

• ▫️No new capital infusion: As a 100% OFS, the IPO doesn’t directly fund growth or expansion for NSDL.

• ▫️Regulatory risk: Shifts in market regulation or policy could impact its business.

• ▫️Competitive risk: While CDSL is the primary peer, NSDL’s larger scale and technological edge lessen the immediate threat.

• ▫️Technology risk: Ongoing innovation is vital in a tech-driven industry; stagnation could hurt NSDL’s prospects.

• ▫️Market demand: Any movement away from securities investment would affect earnings.

Grey Market Premium (GMP) and Investor Sentiment

As of July 28, 2025, the NSDL IPO’s GMP is reported between ₹135–₹140, indicating substantial investor enthusiasm and expectations of a roughly 17% listing gain over the upper end of the IPO price band. This positive sentiment reflects confidence in NSDL’s business model, proven performance, and growth prospects.

NSDL vs. CDSL

With NSDL’s listing, it will become the second Indian depository to be listed after CDSL (which went public in 2017). NSDL boasts a larger base, more extensive DP coverage, greater market share by value, and an advanced technology suite.

Conclusion

The NSDL IPO offers more than just an investment—it provides an opportunity to participate in the essential infrastructure underpinning India’s financial markets. Its market dominance, strong financials, national footprint, and history of innovation make it attractive for long-term investors. However, it is important to weigh potential regulatory or technology-related risks and the implications of the IPO being a 100% Offer for Sale. The remarkable profits for selling shareholders further highlight NSDL’s wealth-creation story and potential as a cornerstone holding in an India-focused portfolio.