Neutral NSDL; target of Rs 1200: Motilal Oswal

Motilal Oswal recommended Neutral rating on NSDL with a target price of Rs 1200 in its research report dated September 17, 2025.

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September 17, 2025 / 12:51 IST

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Motilal Oswal's research report on NSDL

The opportunities for the entire Indian capital market ecosystem over the next decade, with a rising financialization trend but low penetration (demat penetration at 15% vs 60%+ in the US), continue to be immense (highlighted in our capital market thematic report). NSDL – the first depository of the country – is uniquely positioned to benefit from this trend, capturing both the breadth of new retail investors entering the system and the depth of rising custody value from institutional and corporate issuers. NSDL dominates in institutional, custodian, and large corporate accounts, resulting in revenue per active account at ~INR157 in FY25 — nearly 3x that of CDSL. The institutional skew offers more stable revenue pools linked to custody value rather than purely transaction volumes, underpinning resilience across market cycles. NSDL services the widest base of issuers in India, including ~70%+ of unlisted corporates mandated to dematerialize. This not only generates stable, recurring issuer charges but also creates a sticky moat, as issuers rarely migrate once demat systems are embedded. The potential growth for this is large, as the unlisted market in India continues to grow at a healthy pace.

Outlook

We expect a revenue/EBITDA/PAT CAGR of 5%/14%/15% over FY25-28. Given the duopoly nature of the industry and NSDL’s superior pricing power, depositories deserve premium valuations. However, we believe the stock is fairly valued, and all the positives are priced in at current levels. Hence, we initiate coverage on NSDL with a Neutral rating and a one-year TP of INR1,200 (premised on ~45x FY28E P/E).

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