The shares of National Securities Depository (NSDL) saw some profit booking on August 11, dropping nearly 11 percent from its day’s high to close in the red for the first time ever. This comes after a record rally of nearly 62 percent since listing.
The shares of the company dropped 2 percent to close at Rs 1,273 apiece. Earlier in the day, the stock had jumped nearly 10 percent to trade at Rs 1,425 apiece. The newly listed stock has now declined nearly 8.5 percent from that level.
The shares of NSDL had made a decent stock market debut on August 6, listing at Rs 880 apiece on BSE. This marked a premium of 10 percent over its IPO price at Rs 880 apiece. The listing premium was lower than grey market estimates. Analysts had recommended investors to consider holding the stock for the long term, given NSDL’s strong fundamentals and leadership in the depository segment.
NSDL’s P/E ratio currently stands at around 79, higher than that of peer CDSL whose P/E ratio currently stands at around 66.
What lies ahead?
"As one of only two depositories operating in a near-duopoly alongside CDSL, NSDL enjoys strong pricing power, high entry barriers, and a dominant share in value-based transactions and institutional account holdings," said Bhavik Joshi, Business Head, INVasset PMS.
He noted that the stock's current P/E multiple of around 77 may appear stretched when compared to CDSL’s 66, but investors are clearly willing to pay a premium for its scale, technology backbone, and long-standing trust within the ecosystem. "That said, prospective investors should be mindful of certain structural risks — dependence on transaction volumes, evolving investor participation patterns, and the ever-present cybersecurity and regulatory compliance requirements. In the near term, valuations may moderate if market activity slows, offering potential entry points for those who missed the IPO," he added.
Nitin Jain, Senior Research Analyst at Bonanza, said it is recommended for short-term and listing-gain-focused investors to book some profits. "The near-term upside may be capped after such a sharp move, and markets tend to see consolidation post a robust debut. If you are a long-term investor willing to ride out near-term volatility, NSDL remains a high-quality stock supported by rising demat penetration," he added.
NSDL shares are now more expensive than its peer CDSL after its sharp rally, market expert Ambareesh Baliga told CNBC-TV18. "I think along with long investors shifting from CDSL to NSDL post listing, we have seen huge number of momentum trader getting in, which has pushed the stock higher. So, it will be ideal for IPO investors to book profits at current levels and make a shift back to CDSL," he said.
Long term investors should use the dips to accumulate further, while short term investors should book profits after the record rally, Sunny Agarwal of SBI Securities told CNBC-TV18.
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