NSDL – About the Company
National Securities Depository Limited or NSDL is the second largest and only security Depository Company after CDSL. Around 3.23crore people have demat accounts with NSDL, though it is much lower compared to CDSL's 8.3 crore demat accounts.
These are the only two companies providing the security depository services to have the demat account and CDSL is the leaderin terms of the number of demat accounts with a market share of 72.5% of the number of demat accounts in India while NSDL accounts for 27.5%. But NSDL accounts for around 88% of assets under custody while CDSL accounts for the balance.
After the introduction of the Depositories Act in 1996, NSDL is now one the most preferred depository service provider in India with increasing market share in the segment. And NSDL also has the highest number of active instruments, market share in the value of demat account settlement volume and the value of all the assets held under the custody.
As per the data, these accounts are spread across more than 99.27% of pin codes in India and 186 nations across the globe. Moreover, during FY23, NSDL added 3,509 issuers and make its total registeredissuers of 40,987 till FY23. Now after CDSL, NSDL is also looking to raise the fund through IPO and get listed on the leading stock exchanges in India.
NSDL IPO Objectives
The main objective of NSDL to raise the fund through this IPO is to get listed on the stock exchange by carrying out the offer for sale of up to 5,72,60,001 equity shares million by the selling shareholders. As per the draft red herring prospectus (DRHP), through this OFS, National Stock Exchange (NSE) plans to offload1.80 crore shares while IDBI Bank is looking to divest 2.22 crore shares.
Moreover, other stakeholders like Union Bank of India will also offload 56.25 lakh shares, and State Bank of India and HDFC Bank will offload 40 lakh shares each. And the administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) is going todivest 34.15 lakh shares in NSDL.
NSDL IPO Details:
|IPO Open Date||Not Available|
|IPO Close Date||Not Available|
|Listing Date||Not Available|
|Face Value||₹2 per share|
|Lot Size||Not Available|
|Issue Size||57,260,001 shares (aggregating up to ₹[●] Cr)|
|Offer For Sale||57,260,001 shares (aggregating up to ₹[●] Cr)|
|Issue Type||Book Built Issue IPO|
|Listing At||BSE, NSE|
|QIB Shares Offered||Not more than 50% of the Offer|
|NII (HNI) Shares Offered||Not less than 15% of the Offer|
|Retail Shares Offered||Not less than 35% of the Offer|
NSDL IPO Issue Price & Size
The issue price of NSDL IPO will be in the range of Rs xxxx to Rs xxxxx. The size of the issue will be between Rs 2,500 crore and Rs 3,000 crore. However, the exact price of the NSDL IPO and issue size will be known once the IPO launch date is declared.
NSDL IPO Launch Date
The NSDL IPO launch date is not yet declared but the date will be updated as soon as it is officially declared by the company. During the NSDL IPO launch date, the bidding open and close date will be disclosed by the company to all types of investors.
NSDL Financial Statements:
|Particulars in (Rs Cr.)||FY23||FY22||FY21||CAGR|
|Revenue from Operations||1021.99||761.11||467.57||47.80%|
|Contribution to investor protection fund||9.89||8.96||8.84||5.80%|
|Share of Loss of Associate||-4.84||-1.41||0.00|
|Profit before tax||305.04||278.2||246.58||11.20%|
|Profit After tax||234.81||212.59||188.57||11.60%|
NSDL Financial Performance
In the top line, the revenue company has shown significant growth with a CAGR of more than 47% growth in sales in the last three years. In FY21 the revenue of the company was Rs 467.57 crore which reached Rs 1021.99 crore in FY23.
However, the operating profit of the company has not grown with the same speed and that is thanks to decreasing operating margins. In FY21, NSDL has earn EBITDA of Rs 264.46 crore which grew at a CAGR of 12.2% and stood at Rs 333.09 crore in FY23.
The bottom line growth of the company was also not so impressive, which is again thanks to decreasing net profit margins. In FY21, NSDL has earn a Net Profit of Rs 188.57 crore, while in FY23, the Profit after tax was Rs 234.81 crore. And during FY21 to FY23, the company registered a CAGR growth of 11.60% in PAT. And during the same period, the PAT margin fell from 40.33% in FY21 to 22.98% in FY23 making a concerning factor of rising operating costs.
NSDL IPO Promoters & Shareholding of the Company
NSDL is the company managed by the professionals and doesn’t have any particular promoter. But as per the DRHP, IDBI Bank is the largest shareholder in NSDL owning a stake of 26.10% or 5.22 crore shares in this depository, the next major shareholder is NSE having a 24% stake holding 4.8 crore shares.Whereas,Private sector lading bank HDFC Bank holds 8.95% stake, and the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) holds 6.83% stake in the NSDL.
|S.NO.||Name of the Shareholder||No. of Shares||% of pre-Offer shareholding|
|1||IDBI Bank Limited||52,200,000||26.10%|
|2||National Stock Exchange of India Limited||48,000,000||24.00%|
|3||HDFC Bank Limited (SS)||17,899,500||8.95%|
|4||Administrator of the Specified Undertaking of UTI||13,660,000||6.83%|
|5||State Bank of India||10,000,000||5.00%|
|6||Deutsche Bank A.G||10,000,000||5.00%|
|8||The Hongkong and Shanghai Banking Corporation Limited||6,250,000||3.13%|
|9||Standard Chartered Bank||6,250,000||3.13%|
|10||Kotak Mahindra Life Insurance Company Limited||5,940,000||2.97%|
|11||Union Bank of India||5,625,000||2.81%|
Apart from this, SBI and Deutsche Bank A.G. hold a 5% stake each, while Citibank N.A, HSBC and Standard Chartered Bank hold 3.13% stake each in NSDL. And among other shareholders, Kotak Mahindra Life Insurance Company Limited has 2.91% stake, Union Bank of India has 2.81% and Canara Bank holds 2.30% stake in the company.
|S. No.||Name of the Selling Shareholder||Number of Equity Shares being offered in the Offer for Sale (Up to)|
|1||IDBI Bank Limited||22,220,000 Shares|
|2||National Stock Exchange of India Limited||18,000,001 Shares|
|3||Union Bank of India||5,625,000 Shares|
|6||State Bank of India||4,000,000 Shares|
|4||HDFC Bank Limited (SS)||4,000,000 Shares|
|5||Administrator of the Specified Undertaking of the Unit Trust of India||3,415,000 shares|
Why Invest in NSDL IPO?
Investing in a new company IPO can be risky, especially if there is no transparency in the management and financial reporting of the company. However, NSDL is not like this, majorly it has stakeholders from the banks and financial institutions.
However, while investing in any company launching an IPO, there are various factors that should be kept in mind. It helps to know the strength of the company and the risk associated with the company. And we have analyzed both aspects below.
- NSDL is only but the second largest depository in India with the market leader in terms of the value of settlement volume in demat account, number of issuers, value of assets kept in custody and active instruments. It is keeping the large variety of asset classes held in demat accounts.
- As of March 31, 2023, NSDL has a collective of 40,987 registered issuers with a wide-spread network of 283 depository participants operating through 59,401 service centres across India.
- The company earns its revenue mainly from recurring fees with stability in the business model. As on March 2023, the standalone and consolidated operational revenue per investor accountwas 130.05 and 324.82, respectively, which is higher than its competitor. Moreover, it is generating recurring revenue from a range of other services.
- At the security end, the company has invested and implemented a comprehensive risk management system that helps to develop risk management tools to deal with the material risks faced by the company. And to deal with various issues, it has established a security operations centre with 24-hour operations to monitor, detect, analyse, respond and eliminate any unauthorized cyber security access.
- NSDL has constantly invested in innovative technologies to develop a high-tech depository system that caters to various groups of users like depository participants, registrars, issuers, transfer agents, and clearing corporations operating in India.
- At the Financial end, the company has reported significant revenue growth. During FY21 to FY23, its revenue grew at a CAGR of 47.80%, making it one of the fasted growing depository companies in terms of revenue from operations. However, due to high operating cost the EBITDA and PAT has not grown at the same speed during the same period.
- After CDSL, NSDL is the only securities depositary in India but both are operating in a highly regulated environment and also operates in a highly competitive environment.
- The company has to follow all the compliance rules and norms relating to the data protection and privacy of the customers. Any kind of mishandling or breach can cost the company's reputation which will directly affect the operations and revenue of the company.
- The trading volume in the market also affects the NSDL, as any kind of unexpected factor affecting the stock market and sentiments towards it will also affect the revenue of the company.
- The operating expenses of other activities like operating the payment bank's business increase its cost-to-income ratio.
- NSDL also earns from investing and financing activities that are giving negative returns. This has affected the cash in hand of the company in the last few years.
- In the FY23 ending March, the company has contingent liabilities of around Rs 138.56 crore and further there may be more liabilities owing to interest or penalties imposed by the regulatory authorities.
NSDL IPO Grey Market Premium (GMP)
NSDL IPO price has not yet been disclosed, and without the issue price, finding the Grey Market Premium (GMP) is not possible. GMP are the traders ready to pay a premium over the issue price in the grey market and that is usually decided before the listing of the shares. Grey Market Premium is not a reliable indicator to find out the market price of the share on the listing day, but it can give an idea of which share is going to trade on the date of listing.
NSDL IPO Review & Analysis
NSDL is no doubt a reliable company due to its strong position in the depository market. CDSL & NSDL are the only two depositories in India, and there is no other competitor in the market. Investing in the IPO of such companies would be not risky.
However, there are various risks involved with such companies like following the regulatory frameworks and all the compliance-related rules and regulations. But it has the competitive advantage of having a high number of assets value held in the demat account.
The financial growth of the company is also not bad, or you can say satisfying in terms of revenue growth. Though, the concerning factor is operating and net profit margins that are declining, making it difficult to generate higher profits even though the to pline growth is impressive for the last three years.
Finally, the share valuation of the company is the major factor to decide whether to invest or not in the NSDL IPO. If the NSDL IPO price is issued at a high premium, then investors should avoid buying the shares from the IPO, and wait till it comes at a lower price in the market. While on the other hand, if it is launched at a discounted price and available at cheaper rates compared to its peer group companies, then it is advisable to invest in the NSDL IPO.
How to Apply for NSDL IPO?
If you have a trading and demat account with Moneysukh you can easily apply for the NSDL IPO. You have to visit the Moneysukh website and just need to follow the steps given below. However, if you don't have a trading account and demat account, you can apply for the same to open with Moneysukh and then follow the steps mentioned below.
Steps to Apply for NSDL IPO:
Step 1: Keepwatchingwhen NSDL IPO opens for online bidding.
Step 2:When IPO opens, just visit trade.moneysukh.com and log in with your User ID & password.
Step 3:Now you have to find the IPO section and select the NSDL IPO.
Step 4:Here you have to fill in the various details like price, quantity, and so on.
Note:At the time applying in any IPO, always bid at the cutoff price before submitting your application.
Step 5:Now make the payment and submit your IPO application successfully.
How to Check NSDL IPO Allotment Status?
Once the bidding for the NSDL IPO closed, and the date for allotment is arrived, you can check the allotment status on your phone or desktop PC. You can check the IPO allotment status directly through the stock exchanges' websites like NSE or BSE. And if you applied through Moneysukh you check from here also using your PAN card and IPO details.
If you have been allotted any share, the money for the value of the same will be deducted from your account, however, if IPO is oversubscribed many times, there is less chances of getting shares allotment in IPOs. And you are also not lucky enough to get the allotment, then your money will be refunded before the listing date in your bank account. If you have been allotted the shares you can enjoy the listing gains by selling the shares in the secondary market.
Also Read: Golden Rules of investing in Stock Market