Stocks in NSDL experience a 4% decline following the release of Q1 results post-IPO, potentially indicating a cooling off phase after initial debut.
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National Securities Depository Limited (NSDL), India's oldest and largest depository, has reported its first earnings since going public. The report, however, has elicited a less-than-enthusiastic response from the market, primarily due to a decline in revenue despite profit growth and high valuation multiples.
In the June quarter, NSDL reported a net profit of Rs. 90 crore, up 15% year-on-year from Rs. 78 crore. Operating expenses rose 15% year-on-year, but EBITDA still increased 27% to Rs. 115 crore. However, the operating revenue for the quarter fell 23% year-on-year to Rs. 312 crore and dropped 14% compared to the previous quarter.
This falling top line contrasted with the profit increase signals operational efficiency but also raises concerns about sustainable growth. Analysts note NSDL’s high Price-to-Earnings (P/E) ratio of 70–77 times, compared to competitor Central Depository Services Limited’s (CDSL) 66 times, reflecting market expectations already priced in for rapid growth.
Technical analysts report the stock has shown signs of losing momentum after an initial sharp rally post-IPO, with indicators suggesting cooled investor enthusiasm and prompting profit booking and consolidation. The price corrections and volatility post-earnings are regarded more as market responses to elevated valuations and earlier enthusiasm, rather than a reflection of fundamental weakness.
Despite the revenue decline, NSDL has expanded its services and strengthened its position in India's financial ecosystem. The demat account market share of NSDL on a run-rate basis rose to 15.5% in Q1 FY26, up from 9.4% a year earlier. In the equities segment, NSDL's market share improved to 73.2%, up from 70.8% last year.
The depository also strengthened its position in the unlisted market, with 10,392 companies admitted during the quarter. NSDL's leading competitor, CDSL, reported Q1 revenue growth of 15.3% QoQ to Rs. 2,590 crore. However, CDSL is leading in retail participation and new account openings compared to NSDL.
For investors, the coming quarters will be crucial to see whether operational expansion translates into consistent growth for NSDL. As of Wednesday, NSDL shares traded at Rs. 1,231, down 4.3%. Many traders rely on trusted financial platforms for accurate and timely Stock Market News.
NSDL had a strong debut on August 6, opening at Rs. 880, about 10% higher than its IPO price. The Rs. 4,000 crore issue was entirely an offer-for-sale and was heavily subscribed.
In conclusion, the market’s tempered reaction reflects a mix of strong profitability, declining revenues, and premium valuations prompting traders to consolidate gains and investors to reassess near-term growth prospects following NSDL’s recent debut and initial surge in share price. The coming quarters will be critical for NSDL as it navigates these challenges and continues to grow in the Indian financial market.
The decline in NSDL's operating revenue, despite its profit growth and high valuation multiples, has raised concerns about sustainable growth in the finance industry, especially among investors. The expanding services and strengthened position in India's financial ecosystem by NSDL could potentially attract more investing opportunities in the business sector.
