Rs 4,012-crore NSDL IPO gets subscribed 1.78x on Day 1, retail portion booked 186%; should you apply?

This anchor portion witnessed participation from domestic and foreign institutional investors, including Life Insurance Corporation of India (LIC), Smallcap World Fund Inc, SBI Mutual Fund (MF), Fidelity Funds and Nippon India MF, according to a circular uploaded on the BSE's website.

SBI Life Insurance Company and HDFC Life Insurance Company, Abu Dhabi Investment Authority, Ashoka WhiteOak India Opportunities Fund, ICICI Prudential MF and HDFC MF are also among the investors.

Of these, LIC was the largest investor, picking up nearly 18 lakh shares, amounting to 11.99% of the total anchor book, for Rs 144 crore.

According to the circular, NSDL has allotted over 1.5 crore equity shares to 61 funds at Rs 800 apiece. This aggregates the transaction size to Rs 1,201.4 crore.

The Rs 4,011-crore initial public offering (IPO) is scheduled to conclude on August 1. The price band has been set at Rs 760 to Rs 800 per share.

Analysts said one should apply to the IPO with a long-term horizon.

"Investor sentiment has been strong, with a grey market premium of Rs 135–140 pointing to expected listing gains of 17%. While regulatory scrutiny—particularly past issues linked to Karvy — and rising competition from CDSL remain watchpoints, NSDL’s institutional franchise, steady annuity-like cash flows, and sectoral leadership offer a strong case for anchor allocations. At 46× PE, this IPO appeals to investors seeking long-term exposure to India’s capital market infrastructure," said Kalp Jain, Research Analyst, INVasset PMS

Bajaj Broking said the company's strengths include stable revenue base with a significant proportion of recurring revenue and robust IT infrastructure, risk management frameworks and cyber-security measures focused on ensuring the safety and integrity of the depository system.

Regardings its weaknesses, Bajaj Broking said: "The Company relies on complex information technology systems and networks to conduct its operations. Any major disruption, whether due to technical glitches, cybersecurity breaches, or other issues, could negatively impact its business, reputation, operating results, and financial condition. The Company faces intense competition across its lines of business in a highly regulated environment. A failure to effectively compete with peers could adversely affect its business performance, financial position, cash flows, and overall results of operations."

The depository's maiden public issue solely consists of offer-for-sale (OFS) component of 5.01 crore shares and those selling shares under this are -- National Stock Exchange of India (NSE), State Bank of India (SBI), HDFC Bank, IDBI Bank, Union Bank of India and Administrator of Specified Undertaking of the Unit Trust of India (SUUTI).

Since the public issue is entirely an OFS, NSDL will not receive any proceeds from the IPO.

At the upper end of the price band, NSDL's maiden public issue is expected to fetch Rs 4,011 crore, valuing the company at Rs 16,000 crore.

This upcoming listing will make NSDL the country's second publicly traded depository after Central Depository Services (CDSL), which was listed on the NSE in 2017.

The listing of NSDL is crucial in order to comply with SEBI's ownership norms. These regulations require that no entity can hold more than 15% of the shareholding in a depository company.

NSDL's principal shareholders, IDBI Bank and the NSE, are required to reduce their stake in the company to comply with SEBI's rule. Currently, IDBI holds 26.10% and NSE owns 24% stake in NSDL, which exceeds the permissible limit.

NSDL is a SEBI-registered market infrastructure institution offering a wide range of products and services to the financial and securities markets in India. Following the introduction of the Depositories Act in 1996, it pioneered the dematerialisation of securities in India in November 1996.

For the full financial year 2024-25, the depository's net profit surged by 24.57% to Rs 343 crore and total income rose to Rs 1,535 crore, a 12.41% increase over FY 2023-24.

The company announced that half of the issue size has been reserved for qualified institutional buyers, 35% for retail investors and the remaining 15% for non-institutional buyers.

Investors can bid for a minimum lot size of 18 shares and in multiples of 18 thereafter. Investors are required to make a minimum investment of Rs 14,400 to avail one lot of shares.

ICICI Securities, Axis Capital, HSBC Securities and Capital Markets (India), IDBI Capital Markets & Securities, Motilal Oswal Investment Advisors and SBI Capital Markets are the book running lead managers to the issue. Shares of NSDL are expected to list on August 6.