National Securities Depository Limited (NSDL), one of the largest depositories in the world, has launched its Initial Public Offering (IPO), opening for subscription from 30 July to 01 August 2025. This fully Offer for Sale (OFS) based issue will not bring fresh capital into the company but instead enable existing shareholders to divest their stakes.

The IPO is being closely tracked by retail investors, institutions, and market analysts, especially given the company's monopoly-like stature in the Indian capital market ecosystem. With strong financials, a premium grey market signal, and a clean corporate structure without identifiable promoters, the offering appears to be a balanced mix of opportunity and caution.

IPO Details: What You Need to Know

• IPO Type: Book Built Issue

• Issue Size: ₹4,011.60 Crores

• Fresh Issue: Nil

• Offer for Sale: 5.01 Crore Equity Shares

• Price Band: ₹760–₹800

• Lot Size: 18 shares per lot

• Minimum Investment (Retail): ₹14,400

• Minimum Investment (HNI): 14 lots or ₹2,01,600

• Listing On: BSE and NSE

• Tentative Listing Date: 06 August 2025

Anchor Investors and Allotment

Before the IPO opened to the general public, NSDL raised ₹1,201.43 Crores from anchor investors by allotting 1.50 crore shares at ₹800 per share. This positive reception from institutional buyers provides some confidence to retail investors about the IPO's credibility and institutional backing.

• Allotment Date: 04 August 2025

• Registrar: MUFG Intime India Private Limited

Company Background and Legacy

Founded in August 1996, NSDL played a pivotal role in digitizing India’s stock market. Before its advent, the Indian capital market faced numerous issues related to paper-based shareholding and settlement systems, such as delayed transfers, fake certificates, and bad deliveries.

With the enactment of the Depositories Act in 1996, NSDL became the first depository in India, offering secure and efficient dematerialization services. Today, it handles the bulk of securities settlement in the Indian financial system and is integral to the functioning of capital markets.

NSDL is a professionally managed company and does not have a promoter group, setting it apart from many Indian listed entities.

Financial Performance: Steady Growth and Profitability

The company has delivered consistent financial growth, which could appeal to investors seeking long-term compounders. Key metrics over the past three fiscal years are as follows:

EBITDA and PAT have grown at a 2-year CAGR of 22.3% and 39.4%, respectively, a robust pace that reflects the sticky and recurring revenue model of a depository business.

Valuation and Key Ratios

At the upper price band of ₹800 per share, the IPO implies a:

• Pre-issue EPS (FY24): ₹17.16

• Post-issue EPS (FY24): ₹17.16 (No dilution, since it's OFS)

• P/E Ratio (Post-Issue): 46.63x

• Industry P/E: 68x (as per RHP)

• Return on Capital Employed (ROCE): 22.70%

• Return on Equity (ROE): 18.60%

• Return on Net Worth (RoNW): 17.11%

The IPO is fairly valued, though some may argue that a 46.63x P/E is on the higher side for an OFS issue. However, NSDL’s essential infrastructure role and low business volatility may justify this valuation.

Grey Market Premium (GMP) and Listing Gains Outlook

As of 27 July 2025, the GMP stood at ₹144, indicating an expected listing price of ₹944, or a gain of ~18% over the upper band. While GMP is unofficial and unregulated, it remains a good proxy of market sentiment.

Do note that GMP is subject to rapid change, especially close to the closing date and allotment results. Hence, investors must not rely solely on GMP to decide their application strategy.

IPO Subscription Status

As of 11:30 AM on Day 2 (31 July 2025), the IPO has been subscribed 1.12 times overall. This includes:

• QIBs: Moderate participation

• NIIs: Picking up pace

• Retail: Early strong interest

Final day subscription will be key in determining investor appetite and allocation pressure.

Objects of the Offer

As this is a 100% Offer for Sale, NSDL will not receive any proceeds from the IPO. Instead, the selling shareholders, including IDBI Bank, NSDL’s original promoters and other investors, will encash part of their holdings.

This could be a negative for long-term fundamental investors, as it indicates that the company is not seeking capital for expansion or technology upgrades.

Investment Recommendation: Apply or Avoid?

For Listing Gains:
Given the healthy GMP, anchor investor confidence, and robust financials, risk-tolerant investors may consider applying for listing gains.

For Long-Term Investment:
The lack of a fresh issue, premium valuation, and absence of near-term catalysts may make this IPO less attractive for conservative investors seeking long-term growth at reasonable valuations.

Pros and Cons Summary

Pros:

• Market leader in depository services

• High entry barriers and quasi-monopoly

• Consistent profits and strong margins

• Trusted brand with institutional strength

• High GMP indicates demand

Cons:

• 100% OFS; no funds to company

• High P/E valuation at 46.63x

• Regulatory risk from SEBI or Govt. reforms

• Cyclical exposure to capital market activity

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  Disclaimer

  The above analysis is for educational and informational purposes only and does not constitute investment advice. IPO investments are subject to market risks. Kindly consult your financial advisor before investing.

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  The Upcoming IPOs in this week and coming weeks are BLT Logistics, Bhadora Industries, Highway Infrastructure, Parth Electricals & Engineering, Jyoti Global Plast, Essex Marine, Aaradhya Disposal Industries.

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  The Current active IPO are Flysbs Aviation, Cash Ur Drive Marketing, Renol Polychem, B.D. Industries (Pune), NSDL, Takyon Networks, Mehul Colours, M&B Engineering, Sri Lotus Developers & Realty.

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