National Securities Depository Ltd. (NSDL), the prominent depository not only by assets under custody but also by market share in India, has obtained final approval from SEBI for the initial public offering of the company. This is an important development for NSDL as it is an important aspect of financial infrastructure within the country.
Incorporated as a Market Infrastructure Institution (MII) under registration number 8, NSDL led the change from physical to electronic methods of handling stocks in 1996. To be more at pace with the current technological advances, DLT – (debt ledger technology) and DeLiTe- blockchain based technology are being developed by NSDL for the purpose of providing debt security issuance and enhancing loan monitoring, and T+1 settlements, and T+0 settlements of trades are also on the safe, clear transaction NSDL is committed to working with the changing dynamics of the financial markets in India.
IPO Detail
The Offer Document for NSDL IPO will consist of an OFS of 57,260,001 equity shares, resulting in stake reductions by IDBI Bank, NSE, SBI, HDFC Bank and Union Bank of India. In the Draft Red Herring Prospectus (DRHP), it is stated that six shareholders will provide for sale, shares aggregating to 57.3 million. Out of this, IDBI Bank has proposed to sell 22.2 million shares and NSE has proposed to offload 18 million shares. Further, Union Bank of India has proposed to sell 5.62 million share, while SBI has proposed to sell 4 million shares and SUUTI is also planning to divest 3.4 million shares. Further HDFC Bank proposes to sell 4 million shares as well. No new issue raised.
Financial Performance
The statistics on the payouts of NSDL to its shareholders are further evidence of its considerable market presence in India’s financial sector:
The organization was able to maintain a consistent growth trajectory as evidenced by a continuing rise in revenue from operations which reached ₹473.06 crores during the financial year 2023-24, up from ₹409.17 crores during the financial year 2022-23, which represents a year-on-year (Y-o-Y) growth of 15.6 percent. Likewise, some measure of increase was witnessed in Profit Before Tax which improved to ₹327.52 crores as opposed to ₹271.68 crores in the last fiscal recording 20.6 growth Y-o-Y.
In FY 2024, NSDL registered 51.15 lakh new accounts which brought the demat accounts tally to 5.27 crore as of March 31, 2024. The net increase of active depository accounts during the period was 43 lakhs as they increased from 3.15 crores at the end of the last year to 3.58 crores by March 31, 2024.
Leader in Financial Innovation
NSDL continues to evoke new capabilities by exhibiting solutions such as DeLiTe, its debt issuance and covenant monitoring platform based on blockchain technology. Moreover, it is in line with SEBI’s aspirations for T+1 settlements and T+0 processing for efficiency and speedier market transactions.
Competition with CDSL CDSL was the first to go public in 2017 and has more than 60 million demat accounts, making it the most engaged in retail. NSDL on the other hand has a large asset under custody and mainly provides institutional service solutions. This rivalry helps to develop and advance the competition in the financial market of India and hence the IPO of NSDL is something of great importance.
The reason why NSDL’s IPO is the one to follow closely
Turning to the IPO stage, NSDL is highly investable due to its stellar financial performance, cutting-edge solutions, and enormous market dominating position. NSDL has over 5 crores of opened demat accounts holding the highest market share in assets under custody thus making it one of the biggest players in the capital markets of India.
With this IPO, investors have an opportunity to back a company that is actively enhancing its capabilities in the digital as well as the blockchain technology with steady upward revenue growth, an ever-increasing clientele, and a robust outlook on success in the years to come.
Conclusion
NSDL’s IPO brings exciting prospects for those wishing to gain from the expanding horizon of Indian financial markets. It dominates the building blocks for financial services, has a history of successful innovations, and has a well-built operational capacity hence it is very attractive for potential investors.