India’s capital market infrastructure is anchored by two central securities depositories—NSDL (National Securities Depository Ltd) and CDSL (Central Depository Services Ltd). Both institutions play a vital role in dematerialized securities management, yet their strategic focus, customer mix, and growth drivers differ significantly. With NSDL on the cusp of a public listing and CDSL already established in public markets, attention has turned to the valuation gap between the two, particularly through the lens of the Price-to-Earnings (P/E) multiple.

This note conducts a comparative analysis of NSDL and CDSL by examining actual and forecasted earnings, estimating forward P/E ratios, and assessing business-specific catalysts and risks. The goal is to assess whether the premium currently embedded in NSDL’s unlisted share price is supported by projected earnings strength or if a convergence in valuation is more likely in the near term.

FY 2025 Actuals & Trailing P/Es

(Data as on 26 May 2025)

Forecasting Earnings: FY 26E & FY 27E

We project earnings by blending historical growth trends, industry tailwinds, and company-specific catalysts.

CDSL Projections

Why 18%/16% growth?

In FY 25, CDSL rode a wave of retail enthusiasm, new demat accounts surged by 35%, turbo-charging transaction fees. We expect that strength to continue, albeit at a more sustainable clip.

First, fintech tie-ups (Zerodha, Groww) should add 12–14% more retail accounts, translating directly into higher annual maintenance and transaction fees. Second, corporate actions—IPOs, rights issues, bonds—are at multi-year highs, fueling 3–4% PAT growth.

Finally, ancillary e-services (e-Voting, e-Locker, API data licenses) should contribute a further 1–2%. Together, these produce 17.9% projected PAT growth in FY 26 and 16% in FY 27.

NSDL Projections

Why 17%/16% growth?

NSDL’s rebound from FY 24 was fueled by resolution of past governance overhangs and a broad market recovery—PAT jumped 24.6% in FY 25. Moving forward, we see four main drivers:

➢ Institutional Volume Growth: As mutual funds, insurers, and FPIs steadily increase equity allocations, NSDL’s transaction and maintenance fees rise proportionally. Institutional flows tend to be more predictable and higher-value than retail, supporting both top line and margin resilience.

➢ Payments Bank Ramp-up: NSDL’s JV bank, after initial setup costs, is expected to break even in FY 26. Cross-selling deposits and payment solutions to 3 cr+ demat clients will deliver meaningful incremental PAT in FY 27.

➢ Digital Public Infrastructure: Central KYC Registry, National Academic Depository, and e-Sign generate annuity-style revenues with ~70% margins. As regulators mandate wider adoption, these revenues should steady at high growth.

Forward P/E Multiples

Year	CDSL EPS	CDSL P/E (₹1,260)	NSDL EPS	NSDL P/E (₹1,085)
FY 25A	25.20	58.1×	17.15	63.3×
FY 26E	29.70	42.4×	20.05	54.1×
FY 27E	34.47	36.5×	23.25	46.7×

P/E Compression: As EPS rise, P/Es naturally fall if prices remain unchanged, assuming mean-reversion in multiples, this effect alone reduces CDSL’s P/E by 21 points and NSDL’s by 9 points over two years.

Persistent Premium: NSDL commands a 25–28% P/E premium over CDSL across FY 25–27. That premium reflects both NSDL’s deep institutional integration and unpriced optionality (Payments Bank, e-governance), but may compress post-listing as grey-market “scarcity” fades.

Fair Forward Multiples: We believe a sustainable premium is closer to 10–15%, implying NSDL trading at 50–52× on FY 26E earnings, and CDSL at 42–44×.

NSDL’s Moats

➢ Institutional Franchise: Holding 86% of India’s demat asset value, NSDL benefits from higher-value, long-duration relationships. Institutional customers rarely switch depositories, ensuring revenue stickiness and lower marketing costs.

➢ Digital Public Infrastructure: NSDL’s stewardship of the Central KYC Registry and Academic Depository underpins stable annuity revenues. As more services become digitized by regulatory mandate, NSDL’s position strengthens further.

➢ Payments Bank Optionality: Pre-IPO, NSDL’s bank is valued off-balance as an unpriced catalyst. Post-listing, successful bank operations will be fully attributed, justifying a multiple premium.

➢ Pristine Balance Sheet: Zero debt enables aggressive reinvestment in high-ROIC ventures without shareholder dilution.

Potential Risks to NSDL’s Premium

While NSDL’s premium reflects genuine strengths, several forces argue for partial multiple convergence toward CDSL:

➢ IPO Listing Effect: Grey-market shares currently embed an anticipated 15–25% “listing pop.” Once NSDL is publicly listed, that scarcity premium dissolves, leading to a 10–15% P/E compression.

➢ CDSL Retail Momentum: As CDSL’s retail account base continues to expand and monetize data services, its growth profile may approach NSDL’s, narrowing the moat gap.

➢ Regulatory & Competitive Risks: Any regulatory move to cap depository fees or require unbundling of service lines could disproportionately affect NSDL’s high-margin streams.

➢ Payments Bank Execution: If the bank JV faces setbacks or fails to hit break-even, the unpriced optionality premium could reverse sharply.

NSDL’s higher P/E multiple reflects its strong institutional dominance, scalable digital public infrastructure initiatives, and optional upside from its Payments Bank venture. However, a portion of this premium is linked to its pre-IPO scarcity and unlisted status, which is expected to normalize post-listing. On the other hand, CDSL continues to benefit from strong retail-led growth, fintech integrations, and rising fee-based income from a broadening retail investor base.

Disclaimer: All the estimates are purely discretionary and based on independent analysis. This report is for educational purposes only and does not constitute investment advice. Readers should conduct their own due diligence before making any investment decisions.