You never see it on your screen.
There’s no ticker flashing its name.
Yet, each time a stock changes hands, a mutual fund unit is credited, or an initial public offering (IPO) allotment hits your account, this company earns a fee.
It doesn’t sell excitement or promise quick profits. It simply ensures ownership exists, quietly, flawlessly, and digitally.
This is the story of National Securities Depository Limited (NSDL), the invisible backbone of India’s equity culture.
The silent infrastructure of wealth
When India moved away from paper share certificates in the mid-1990s, NSDL was born to digitise ownership. It didn’t just make settlements faster; it cleaned up the chaos of lost certificates, fake signatures, and endless paperwork.
Nearly three decades later, that same function has turned into a steady, high-margin business. NSDL today holds assets worth Rs 464 lakh crore in dematerialised custody, about 87% of India’s market value, making it the country’s dominant depository by value.
Its 4 crore accounts as of 31 March 2025 look small beside rival Central Depository Services (India) Limited’s 16 crore-plus, but the average account at NSDL holds Rs 1.18 crore of securities, roughly 25 times CDSL’s Rs 4.6 lakh. NSDL is the banker of India’s big money: institutions, corporates, insurers, and foreign investors.
Retail India’s love affair belongs to CDSL
If NSDL is the banker, CDSL is the shopkeeper. It owns the retail investor. Every time a new millennial downloads Zerodha or Groww, chances are their demat account sits on CDSL’s platform.
That explains the gap: CDSL commands nearly 80% of all demat accounts but just 13% of total custody value. NSDL, with one-fifth of the accounts, controls almost nine-tenths of the market’s rupee value.
CDSL’s fortunes rise and fall with trading volumes and IPOs. Its Q2FY26 consolidated numbers show income of Rs 319 crore and net profit of Rs 140 crore. These are solid but sensitive to market activity.
NSDL, by contrast, reported revenue from operations of about Rs 312 crore and net profit of nearly Rs 90 crore in Q1 FY26, driven largely by recurring fees rather than daily trading activity.
A toll-collector business
Depositories don’t trade or advise. They charge for access. Custody fees, issuer charges, and transaction levies create an annuity-like revenue stream. Whether investors make or lose money, NSDL and CDSL still get paid.
In NSDL’s case, recurring depository revenue accounted for about 42.3% of standalone revenue and 19.7% of consolidated revenue in FY25, while the rest comes from activity-linked fees and services.
That structure gives it enviable stability. Its operating margin stands around 26%, and return on equity (ROE) hovers near 18% — numbers that many private banks would envy.
The duopoly nature of the industry helps. No new depository has been licensed since 1999. Both NSDL and CDSL are effectively utilities: regulated, indispensable, and quietly profitable.
Two very different business models
CDSL’s power lies in scale. It has turned financial inclusion into a growth engine, onboarding investors from every district and integrating with fintechs. Its 574 depository participants (DPs) cover 98% of Indian pincodes. That reach explains its Rs 1,082 crore consolidated revenue and Rs 526 crore profit in FY25.
But the trade-off is dependence on retail enthusiasm. A lull in IPOs or market sentiment can hurt its transaction fees.
NSDL, on the other hand, thrives on value under custody, not volume. Institutional and corporate clients pay annual charges linked to the worth of securities they hold. Even if trading slows, those assets don’t vanish. That makes NSDL’s earnings less cyclical.
NSDL facilitated Rs 103 trillion worth of settlements in FY25, commanding two-thirds of all demat-based transactions by value. Its earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin rose to nearly 26%, with net profits up 25% year-on-year.
Beyond demat: the invisible empire expands
NSDL has quietly built a second layer of infrastructure. Through NSDL Database Management Limited (NDML) and NSDL Payments Bank Limited (NPBL), it now manages everything from know-your-customer (KYC) records to micro-ATMs.
These two subsidiaries contributed over half of NSDL’s consolidated revenue in FY25. NDML maintains 19 million KYC records, while NPBL had about 2.4 million active accounts as of March 2025, and 307,200 micro-ATMs.
Together, they position NSDL as a financial-data utility that earns from every digital handshake between investors, brokers, and issuers.
CDSL’s own arms; CDSL Ventures Limited (CVL), Centrico Insurance Repository Limited (CIRL), and Countrywide Commodity Repository Limited (CCRL), play a similar role. They manage KYC, insurance policies, and electronic warehouse receipts (e-WRs).
But their combined contribution is far smaller, underlining how different the two models have become: CDSL scales breadth, NSDL deepens value.
The regulatory moat
Both depositories exist because the Securities and Exchange Board of India (SEBI) wants safety and transparency in capital markets. That regulatory birthright creates a near-permanent moat. Once a company dematerialises its shares, switching platforms is complex and rare.
SEBI’s mandate requiring unlisted public companies to dematerialise has expanded NSDL’s reach further. NSDL commands about 90% share by value and 89% by quantity in unlisted equity demat, and roughly 73% share with respect to unlisted companies in FY25. Each new mandate effectively enlarges its captive customer base.
CDSL benefits too, as every new retail investor must open an account with either depository. But NSDL’s high-value client base and issuer relationships mean it often captures the long-term, sticky flows.
The invisible beneficiary of India’s savings boom
Both firms are riding the same megatrend: India’s financialisation. The number of demat accounts has risen from 4 crore in FY2020 to about 19.24 crore by FY2025, with penetration at roughly 13.4%. In the United States (US), it’s above 60%.
As households shift savings from gold and real estate into equities, mutual funds, and exchange-traded funds (ETFs), depositories collect a toll on every incremental rupee.
Newly listed, quietly watched
NSDL listed on the stock exchanges in August 2025, marking its debut as a public company. It was one of those quiet listings that didn’t dominate headlines but drew long-term institutional interest.
At present, the stock trades around Rs 1,058, valuing the company at about Rs 21,000 crore.
For investors, the listing turned a near-invisible institution into a visible compounder. Yet its appeal isn’t about growth fireworks. It’s about longevity, regulatory backing, and recurring cash flows in a financial ecosystem that keeps expanding.
Valuations and what they reveal
NSDL’s sales and net profit have grown at a three-year compound annual growth rate (CAGR) of 23% and 17%, respectively. It reported a three-year average net margin of 23% and return on capital employed (ROCE) near 23%. The stock trades at a price-to-earnings (P/E) ratio of about 62 times. Its debt-free balance sheet and modest capital expenditure (capex) needs make it a low-risk compounding story, though much of that optimism already appears priced in.
CDSL, on the other hand, trades at 68 times earnings, a premium to its five-year median. It enjoys a higher 3-year average ROCE of 37% and net margins near 52%. CDSL’s sales and net profit have grown at a three-year CAGR of 25% and 19%, respectively.
It has stronger free cash flow generation but also more sensitivity to investor behaviour and capital-market cycles. While NSDL’s profitability is built on value and predictability, CDSL thrives on volume and volatility.
Both are pristine on paper, with zero debt, high cash reserves, and minimal receivables. What differentiates them is time horizon: NSDL’s earnings visibility stretches farther, CDSL’s growth spikes faster.
Reading between the lines
Neither business lends itself to dramatic growth stories, yet both are quietly compounding the infrastructure of India’s investing boom. Their valuations today seem to price in perfection. The structural duopoly limits runaway expansion, while regulatory pushes like dematerialisation of private firms or bond-market digitisation offer incremental, not exponential, upside.
The real intrigue lies in how India’s next wave of savings flows — from mutual funds, insurers, and pension money — splits between these two platforms. If retail activity steadies, CDSL’s scale pays off. If institutional depth grows faster, NSDL’s moat only widens.
There may never be a single winner here, only two very different ways to collect the toll on India’s growing pool of financial assets.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article. The website managers, its employee(s) and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
k