National Securities Depository Ltd (NSDL), India’s first and biggest depository services company, has initiated talks with investment banks for an initial public offering (IPO) worth ₹4,500 crore, two people aware of the development said.
The IPO is likely to be worth at least ₹4,500 crore at a valuation of ₹16,000-17,000 crore, said the second person cited above. An email sent to NSDL remained unanswered till press time.
“NSDL has initiated talks on its planned IPO. Most top domestic and foreign investment banks are vying for the IPO mandate and the mandates may be finalized in the next few weeks. The IPO is mostly going to be a secondary share sale by existing investors, while some small amount may be raised as part of the IPO. Most shareholders of the company, including several public sector bank shareholders and other investors in the company are likely to sell part of their shareholding through the IPO,” one of the two people cited above said requesting anonymity.
NSDL was set up in 1996 after the enactment of the Depositories Act. As of 31 May, it had over 27.6 million investor accounts, with a demat custody value of ₹297.55 trillion. The depository has a market share of more than 89% in terms of demat assets value.
NSDL’s biggest shareholders are IDBI Bank and the National Stock Exchange (NSE), holding 26% and 24% stakes, respectively. Other state-owned lenders State Bank of India, Union Bank of India and Canara Bank own 5%, 2.81% and 2.30%, respectively, while the central government, through the Specified Undertaking of the Unit Trust of India (SUUTI) holds 6.83%. Other NSDL shareholders include HDFC Bank, Citibank, HSBC, Standard Chartered Bank, Deutsche Bank, Kotak Mahindra Life Insurance Co. Ltd and IIFL Special Opportunities Fund.
India’s only other depository—Central Depository Services (India) Ltd (CDSL)—went public in 2017, raising ₹524 crore in an IPO which was subscribed 170 times. CDSL was set up in 1999.
For the financial year ending 31 March 2022, NSDL reported a consolidated revenue of ₹821.29 crore, up 56% from the previous fiscal’s ₹524.30 crore. The company reported a profit of ₹212.32 crore in FY22, compared to a profit of ₹188.55 crore in the previous fiscal.
NSDL’s depository services contributed ₹369.26 crore revenue in FY22, followed by its banking services business which contributed ₹299.24 crore and database management services which brought in ₹92.60 crore.
NSDL’s plans to go public come at a time when demat account openings have exploded due to the post-covid rally in stock markets. After a sharp jump in new demat accounts to 14.2 million in FY21, openings surged further to 34.7 million in FY22. The total number of demat accounts in the country stood at 94.77 million at the end of 31 May 2022. To be sure, demat account openings are expected to slow down this year due to the correction in stock prices and volatility due to global macroeconomic challenges.