NSDL Or CDSL: Which Offers True Value?

India’s capital market infrastructure is undergoing a seismic shift — fueled by fintech adoption, regulatory reform, and over 15 crore active demat accounts. At the core of this digital revolution lie two entities:

• NSDL (National Securities Depository Limited) – the institution-first pioneer, now prepping for a major IPO.
• CDSL (Central Depository Services Limited) – the listed, retail-facing disruptor with aggressive tech adoption.

Now, with NSDL’s INR 3,000 crore IPO on the horizon and CDSL trading at a lofty valuation, the critical investor question is:

Is NSDL undervalued? Does CDSL holds more sustainable upside? And what do current valuations really tell us?

🏗️ Structural Showdown: NSDL vs CDSL

Feature	NSDL	CDSL
Year of Establishment	1996	1999
Status	Unlisted (IPO imminent)	Publicly listed
Core Focus	Institutional, FPIs, custodians	Retail investors, fintech platforms
Demat Accounts (Mar 2025)	3.88 Cr	15.29 Cr
Assets Under Custody	INR 453 Lakh Cr	INR 35.9 Lakh Cr
Share of FPI Holdings	99.99%	Nominal
Tech Offerings	e-Gov stack, Aadhaar, FPI monitoring	Multilingual chatbot, API stack, Digilocker, mobile app

Insight: NSDL controls high-value institutional flow and systemic infrastructure. CDSL dominates account volume, especially among new-age investors.

📈 NSDL vs CDSL: FY25 Financials Snapshot

Metric	NSDL	CDSL
Revenue	1,535	1,199
EBITDA	375	624
PAT	343	526
Operating Margin	26.4%	58%
Net Profit Margin	24.1%	48.6%
ROE	17.1%	32.6%

Observation: CDSL’s margin profile is significantly higher, powered by scalable retail operations. NSDL, though lower in margin, has more consistent and regulated revenue streams from issuers, custodians, and compliance services.

💰 Valuation Comparison: NSDL or CDSL

📌 CDSL (as of June 2025)

• Market Cap: INR 36,354 Cr
• P/E (TTM): ~69x
• P/B: ~20.6x
• Earnings Yield: ~1.45%

📌 NSDL (Unlisted & IPO Pending)

• Unlisted Valuation: INR 25,500 Cr (at INR 1,275/share)
• IPO Offer Size: INR 3,000 Cr
• PAT (FY25): INR 343 Cr
• Implied P/E: ~74.3x
• P/B: ~12.7x
• Earnings Yield: ~1.35%

Key Insight: Despite being unlisted, NSDL’s implied valuation is even higher than CDSL’s, with a lower ROE and smaller PAT base. Market euphoria around its IPO may be driving unsustainable pricing unless corrected.

🔬 Valuation Sensitivity: What the Numbers Really Say

📉 NSDL IPO Valuation Sensitivity

IPO Valuation (INR Cr)	Implied P/E	Earnings Yield (%)
22,000	~64x	1.56%
25,500 (current)	~74x	1.35%
28,000	~82x	1.22%
30,000	~88x	1.14%

📌 Takeaway: Even at INR 25,500 Cr, NSDL commands a premium higher than its listed peer, despite lower margins and ROE. A more attractive IPO pricing range would be INR 700–800 to align with a fair ~40x P/E.

CDSL – PEG Analysis: Growth Needed to Justify Valuation

Required EPS Growth (%)	PEG Ratio (P/E ÷ Growth)
10%	6.9
15%	4.6
20%	3.45
25%	2.76
30%	2.3

📌 Takeaway: CDSL needs to deliver 20–30% EPS CAGR to justify its P/E of ~69x. This becomes difficult if IPO activity moderates and transaction-based income declines, as seen in Q4 FY25.

Earnings Yield vs Bond Yield: Too Much Risk for Too Little Return?

• CDSL: ~1.45% earnings yield
• NSDL: ~1.35% implied yield
• 10-Year Indian G-Sec Yield: ~7%

📌 Implication: Both depositories offer returns far below the risk-free rate — suggesting extreme investor optimism or mispricing. Unless robust earnings growth continues, these valuations could face pressure.

🔭 Outlook

🚀 CDSL Growth Levers

• Retail demat growth in Tier II/III cities
• Expansion of CDSL Ventures (KYC, e-insurance)
• Fintech onboarding (APIs, app, multilingual chatbot)
• eCAS and margin pledge APIs for brokers

🧱 NSDL Strategic Edge

• Dominance in institutional custody
• SEBI-aligned T+0 settlement infrastructure
• 100% coverage of FPI compliance
• Potential digital trust leadership post-IPO

The Final Verdict: Value, Growth, or Risk?

Category	Winner
Profitability & ROE	✅ CDSL
Valuation Discipline	❌ Neither
Margin Expansion	✅ CDSL
Defensive Stability	✅ NSDL
IPO Catalyst	✅ NSDL
Long-Term Compounding	⚖️ Tie — depends on execution

Conclusion

Both NSDL and CDSL are irreplaceable to India’s capital market fabric. But as with all infrastructure stocks, valuation discipline matters. CDSL’s growth must now prove worthy of its price tag. NSDL IPO must be rationally priced to avoid listing disappointment.

The market will reward execution over narrative. Choose accordingly. For more details related to IPO GMP, SEBI IPO Approval, and Live Subscription stay tuned to IPO Central.