National Securities Depository (NSDL) share price has risen 16.2% to an intra-day high of Rs 1087.90 on the BSE. This is the second day of trading, and the stock has surged 24% from its listing price.
The shares of NSDL hit the bourses on Wednesday, August 6, for the first time and listed at a premium of 10% to its issue price. The company set the issue price at Rs 800 while it was listed at a price of Rs 880 on the BSE.
Both NSDL and CDSL are prominent depository players, and we are very positive on the depository duopoly segment, said Deven Choksey, Managing Director of DRChoksey FinServ.
With projections that India’s market cap is set to triple in 3 years to Rs 15 trillion, depositories will continue to find favour as a sector-specific play. NSDL commands a higher share of the revenue, while CDSL has a higher number of accounts because of the retail focus.
“As a result, one offers value (i.e. NSDL) and the other one volume (i.e. CDSL). NSDL has an enviable revenue pipeline with 3 streams of revenue opportunity. This is what could be a differentiator going forward,” added Choksey.
NSDL Valuation: Anand Rathi View
In its IPO note, before the listing of NSDL, domestic brokerage house Anand Rathi pointed out that the depository major is likely to “maintain its focus on unlocking growth opportunities and deepening market reach by utilising its core competencies. The company plans to strengthen and modernise its IT infrastructure to improve operational efficiency, elevate service standards, and bolster resilience.”
Additionally, “it aims to broaden its range of services, enhance its database management capabilities, and expand the market share of its payments bank division,” they added.
This, as per many market observers, helps in enhancing the valuation call for NSDL.
NSDL IPO details
The issue was an offer for sale of 5.01 crore shares for a worth of Rs 4,010.95 crore. The subscription for the bidding was opened on July 30 and ended on August 1. The allotment was finalised on August 4. The issue included a reservation of up to 85,000 shares for employees offered at a discount of Rs 76 to the issue price.
ICICI Securities is the book-running lead manager of the NSDL IPO, while MUFG Intime India (Link Intime) is the registrar for the issue.
NSDL business model
NSDL is a SEBI-registered market infrastructure institution (MII) and a pioneer in the dematerialisation of securities in Indian capital markets. The company has been in the business of depository operations for over 26 years. 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.