Motilal Oswal initiates coverage on NSDL with 'Neutral' rating; check TP

Motilal Oswal has initiated coverage on National Securities Depository (NSDL) with a ‘Neutral’ rating and a target price of ₹1,200, citing its strong position in India’s capital market ecosystem but noting that current valuations already factor in most positives.

 

At 10:30 AM, NSDL share price was trading 0.09 per cent higher at ₹1,299.5 per share. In comparison, BSE Sensex was up 0.29 per cent at 82,622.65.

 

NSDL shares made their stock market debut on August 6, 2025. On BSE, the stock listed at ₹880 per share, reflecting a premium of ₹80 per share or 10 per cent above the issue price of ₹800 per share.  

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Why did Motilal Oswal initiate coverage on NSDL? 

Strong positioning in capital markets

Motilal Owal believes NSDL is uniquely placed to capitalise on the financialisation trend, with demat penetration at only 15 per cent compared with over 60 per cent in the United States (US). With dominance in institutional and large corporate accounts, NSDL generated ₹157 revenue per active account in FY25, nearly 3x that of rival Central Depository Services (CDSL), driven by stable custody-linked income rather than just transaction volumes.

 

The depository also services more than 70 per cent of unlisted corporates mandated to dematerialise, creating sticky and recurring issuer revenues, the brokerage noted.

Retail growth and fintech partnerships

NSDL has increased retail investor engagement through partnerships with fintech brokers and wider digital onboarding in Tier-2/3 cities. This push helped its incremental market share in new demat accounts rise from 10 per cent in August 2024 to 17 per cent in August 2025. Overall demat market share, however, remains at 20 per cent, leaving headroom for further growth. 

Subsidiaries add diversification

Subsidiaries NDML (KYC Registration Agency, insurance repository) and NPBL (payments bank) contributed about 55 per cent of consolidated revenue in FY25. NDML delivered over 35 per cent Earnings before interest, tax, depreciation and amortisation (Ebitda) margins, while NPBL, which handles nodal banking for UPI-based initial public offering (IPO) subscriptions, has turned profitable but remains in investment mode.

Financial outlook

The brokerage estimates revenue/Ebitda/PAT compound annual growth rate (CAGR) of 5 per cent/14 per cent/15 per cent respectively over FY25–28, with Ebitda margins improving from 53 per cent in FY25 to 58 per cent by FY28. NSDL’s higher pricing power in a duopoly market remains its key strength.

 

However, the stock is fairly valued, and all the positives are priced in at current levels, analysts noted. 

Risks and triggers

Downside risks include weaker equity market sentiment or tighter Securities and Exchange Board of India (Sebi) intervention on fee structures, which may impact monetisation. Upside triggers could stem from stronger retail participation, a surge in IPOs, or regulatory changes allowing greater pricing flexibility.