India’s Big Depository NSDL is headed for an IPO. Here’s everything you need to know…

2025 has seen a pick-up in fresh public issues, and the much-awaited IPO of the National Securities Depository (NSDL) is expected later this year. It is one of the marquee public issues the street is watching out for.

NSDL IPO key highlights: NSDL files addendum to DRHP

In the latest, the company has filed an addendum to the Draft Red Herring Prospectus (DRHP) with the market regulator, SEBI. The key highlight of the addendum is the issue size. The IPO size has been cut down to 50.15 million shares as per the addendum document, compared to 57.26 million shares stated in the DRHP.

Before moving on, let me explain that the addendum to the DRHP is a document that has updated information about the company’s financial performance, business, and other matters. It is filed with SEBI by the companies that are in the process of listing.

What is NSDL and its business

National Securities Depository Ltd. (NSDL) was originally incorporated in April 2012 as “NSDL Depository Ltd.”, and it is a SEBI-registered market infrastructure institution (MII). It is a pioneer in the dematerialisation of securities in Indian capital markets.

After almost a year of incorporation, the company’s name was changed to “National Securities Depository Limited”. The company has been in depository operations for over 26 years, as per the data provided in the DRHP. NSDL started operations for the first time in 1996.

Coming to the core business, it provides electronic infrastructure for the dematerialisation of securities and facilitates the electronic settlement of trades in the Indian securities market. NSDL was among the first few global depositories to directly implement dematerialisation. It bypassed the two-step immobilisation and subsequent dematerialisation process.

NSDL IPO Launch Soon: Key Service Provided

It provides services such as account maintenance, dematerialisation, margin pledge, inter-depository transfer, corporate action processing, e-voting, consolidated account statements (CAS), dividend distribution, facilitating securities lending and borrowing, SMS alerts, e-delivery instruction slips, and depository account validation.

Fun fact: NSDL was the first depository to introduce instant messaging alerts (over SMS) to investors in August 2007, and rolled it out fully after a month in September 2007.

NSDL IPO: Financial performance

Over the last three financial years, the company’s total revenue has surged year-on-year. However, it must be noted that the contribution of depository services to the revenue hasn’t changed much. In FY24, the depository reported total revenue from operations of Rs 1,268.24 crore, out of which almost 37.3% of the revenue came from depository services. In FY23, NSDL’s total revenue from operations stood at Rs 1,021.93 crore, out of which revenue from depository services was 40% of the total revenue.

Particulars	FY22 (Rs in crore)	FY23 (Rs in crore)	FY24 (Rs in crore)
Total revenue	761.11	1,021.93	1,268.24
Revenue from depository services	369.26	409.14	473.03
Contribution of depository services to total revenue	48.52%	40.03%	37.30%

NSDL has been consistently rewarding investors. It has paid a dividend of Rs 20 crore every year in the past three years. In FY22, the dividend payout ratio was 9.4%; in FY23, it was 8.52%; and in FY24, it was 7.26%. In the first nine months of FY25 (9MFY25), NSDL’s dividend payout ratio was 6.3%, compared to 10.21% in the same period a year ago.

In FY23, the company passed a resolution to subdivide one equity share into 5 equity shares, with a face value of Rs 2 each. Before that, the face value of the equity shares was Rs 10.

NSDL Payments Bank (NPBL): The banking services arm

NSDL derives the major part of its revenue from its banking services subsidiary, NPBL. It stands for NSDL Payments Bank Ltd. Incorporated on August 17, 2016, NPBL is a payments bank that commenced its business operations on October 29, 2018. It is engaged in the payment banking business. NSDL holds 100% ownership and voting power in NPBL. The primary focus of NPBL is financial inclusion, aiming to bring financial services to the disadvantaged and people with low incomes, especially in remote areas. It operates on a business-to-business (B2B) model.

NSDL Payments Bank: Range of services

NPBL offers a range of digital banking solutions and products. These include accepting demand deposits, providing payment, remittance, or recharge services through its mobile application. Also, it is engaged in the issuance of debit cards and co-branded prepaid cards.

To give you context, as of FY23, the transactions through prepaid cards aggregated to Rs 7,386 crore and Rs 5,934 crore during the nine months ended December 31, 2024.

It is also involved in the distribution of third-party products such as life insurance, health insurance, mutual fund schemes, bank verification services for corporate brokers, and Cash Management Services (CMS).

NSDL IPO: Market position and comparison with CDSL

India has two depositories, NSDL and Central Depository Services (CDSL). The data, however, clearly indicates that NSDL’s market share is significantly higher than CDSL in some aspects.

NSDL was the largest depository in India in terms of the number of issuers, the number of active instruments, market share in demat value of settlement volume, and value of assets held under custody as of the first three quarters of FY25, according to a CRISIL report. NSDL’s issuers stood at 64,535, which was double compared of CDSL’s 31,557 as of December 31, 2024.

Before moving ahead, the NSDL issuer is a company or organisation that has issued securities and is registered with NSDL. The securities could be anything, like shares, bonds, etc. These companies/issuers use the platform of NSDL to manage and transfer securities to investors.

NSDL holds a higher share compared to CDSL (in terms of the quantity and value of securities held in demat form). However, depository participants (DPs) with NSDL are lower than CDSL. That said, the total number of DP service centres for NSDL is higher. CDSL had 17,883 DPSC as of 9MFY25, as against 63,542 DPSC of NSDL.

NSDL IPO: Comparison of demat accounts held

CDSL has an upper hand when it comes to demat accounts, which is perhaps a key metric here. As of December 31, 2024, the total demat accounts with CDSL stood at 14.65 crore, while NSDL had 3.88 crore active demat accounts.

But NSDL remains the largest depository in terms of the value of assets held under custody. The average value of assets held in demat accounts with NSDL was Rs 1.25 crore per account, compared with CDSL’s Rs 5 lakh. This indicates that there is a significant difference between NSDL’s client base portfolio when compared with that of CDSL.

Also, in terms of revenue per investor, NSDL’s standalone revenue was Rs 130 and transactional revenue was Rs 64, which is substantially higher than CDSL’s Rs 54.3 and Rs 30.3, as of March 2023. More recent data eludes us.

For the unlisted segment too, NSDL beat CDSL with a higher margin. NSDL had 53,169 unlisted companies compared to CDSL’s 21,295, as of December 2024.

NSDL has serviced almost 100% of the value of equity, debt, and other securities held by foreign portfolio investors (FPIs) in dematerialised form in India as of December 2024.

NSDL IPO: Stake sale by key shareholders

IDBI Bank and National Stock Exchange (NSE) are the biggest shareholders that will be selling their stakes in the IPO. IDBI Bank will be offloading up to 22.22 million equity shares. In total, IDBI Bank owns 26.10% of NSDL, making it the biggest shareholder of the company.

IDBI Bank is followed by the National Stock Exchange of India, which will sell up to 18 million equity shares. The NSE owns 24% of the NSDL, or 48 million shares.

Apart from these two, Union Bank of India, State Bank of India, and HDFC Bank will be paring stake in the upcoming IPO. Also, the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) will sell up to 3.42 million shares.

Why are IDBI Bank and NSE selling stakes?

The stake sale is not just to unlock value but also due to a SEBI directive. IDBI Bank and NSE are required to mandatorily dilute their shareholding to below 15% by October 13, 2025, as their current holding exceeds the permissible limit under SEBI’s D&P Regulations.

NSDL IPO: Promoters and management

The company does not have an identifiable promoter or members forming the ‘promoter group’. It is a professionally managed company, and there are no members forming part of the ‘promoter group’.

NSDL’s management team includes a managing director and chief executive officer, Vijay Chandok, executive directors, and other senior management personnel. According to the DRHP, the Group Companies include IDBI Bank and India International Bullion Holding (IIBHIL).

NSDL IPO: Risks involved

The depository had a few pending proceedings against it. As of now, most of the cases hold no ground. However, there is one that is still pending.

This case is related to a stockbroker scam, which is widely known as the Karvy Stock Broking scam. It was alleged that NSDL did not comply with regulatory norms, including

– Violation of certain provisions of the Depositories Act

-Failure to adopt proper due diligence while processing investor complaints with respect to misutilisation of securities held with Karvy Stock Broking(KSBL).

The SEBI interim order dated November 2019 alleged that Karvy pledged clients’ shares unlawfully in order to avail of loan facilities from various banks and NBFCs. NSDL responded to this notice and presented submissions. This matter is currently pending.

Also, SEBI has enforced actions against NSDL in the past through other show-cause notices. NSDL had received a notice in a matter related to the termination of a depository participant that was issued by SEBI. However, the case has been resolved.

NSDL’s connection with Protean eGov Technologies

Another interesting connection—have you heard of Protean eGov Technologies? Its share price fell more than 30% recently. NSDL has an old connection with it. NSDL was once a subsidiary of Protean eGov.