NSDL IPO of ₹3,000 Crore Approved by SEBI: Key Investors Like NSE, HDFC Bank to Pare Stakes

The upcoming NSDL IPO is expected to have a noteworthy effect at the financial marketplace due to its leading reputation as a main securities depository in India. With SEBI's approval, the imminent NSDL IPO ambitions to raise ₹3,000 crore, providing an opportunity for both institutional and retail investors to participate in NSDL's growth. Expected stakeholders like the National Stock Exchange (NSE) and HDFC Bank are predicted to pare and lower their holdings within the IPO, hence heightening its importance.

NSDL has previously submitted the Draft Red Herring Prospectus (DRHP) with SEBI on July 7, 2023. Nevertheless, the process faced a temporary setback in August 2023 when SEBI located the DRHP in abeyance. This change and transition is common, as SEBI may also delay an IPO if there is an ongoing investigation or if requested information from the company or other regulatory bodies is delayed. Thankfully, the suspension was lifted, and SEBI released its final statement on September 30, 2024, providing approval for the IPO to proceed.

Background and Significance

NSDL was established in 1996, and considering the fact that then, it has performed a pivotal role in transforming India's capital market via facilitating the dematerialization of securities. As the primary and biggest depository in India, NSDL holds and manages securities in electronic form, ensuring performance, transparency, and protection within the buying and selling manner. With the NSDL IPO, the enterprise pursues to strengthen its capital base, help future increase initiatives, and enhance its market presence.

A tremendous portion of NSDL's revenue is derived from transaction-based activities, closely dependent on high trading volumes within the securities marketplace.

NSDL's revenue is primarily driven by transaction-based activities, which include: Depository Services, Clearing and Settlement Services, Corporate Actions and other services such as account maintenance, transaction processing, and value-added services.

National Securities Depository Limited (NSDL) IPO Details

The NSDL IPO consists of a total Offer for Sale (OFS) of 57,260,001 equity shares valued at ₹2 per share. Major leading investors that initially have stakes which are reducing their stakes include the National Stock Exchange (NSE), with a view to offload 18,000,001 shares, and IDBI Bank, selling 22,220,000 shares. Union Bank of India has divest 5,625,000 shares, and even State Bank of India (SBI) and HDFC Bank also promote and sell 4,000,000 shares. Additionally, the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) will offer up to a few 3,415,000 shares through this sale.

This OFS structure allows prominent shareholders to reduce their holdings while helping the depository become a publicly listed entity.

Key Investors and Their Stakes

The presence of renowned investors such as NSE and HDFC Bank brings credibility and interest to the NSDL IPO. These businesses have been long-standing participants in NSDL, contributing extensively to its growth and achievement, development and success. The initial public offering allows them a chance to reduce their ownership, allowing a broader range of investors to benefit from NSDL's growth.

The Initial Public Offering (IPO) is being presented an  offer for sale  on the market on the market, with six shareholders which consist of National Stock Exchange of India (NSE), HDFC Bank, IDBI Bank, State Bank of India (SBI), Union Bank of India, and the Administrator of the Specified Undertaking of the Unit Trust of India (UTI), together promoting a entire total of 57.3 million shares. Among all the shareholdings, HDFC Bank holds 8.95% stake in NSDL which offloaded 2% of its stocks in the public issue. This shift is predicted to cause a surge in HDFC Bank's stocks as investors react absolutely to the news.

Pre-offer Shareholding of  Selling Shareholders

The aggregate pre-Offer shareholding of the Selling Shareholders as a percentage of pre-offer paid-up Equity Share Capital as on July, 2023.

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Name of Selling Shareholders	No. of Equity Shares held	% of pre-offer paid up equity share capital
IDBI Bank Ltd.	52,200,000	26
National Stock Exchange of India Ltd.	48,000,000	24
HDFC Bank Ltd (ss)	17,899,500	8
Administrator of the Specified Undertaking of the Unit Trust of India	13,660,000	6
State Bank of India	10,000,000	5
Union Bank of India	5,625,000	2

Market Impact and Investor Sentiment

The market has seen a significant positive effect after the IPO was approved, with HDFC Bank's shares increasing by more than 1% post the announcement. This reflects investor confidence within the potential of NSDL's public offering. The successful listing of NSDL will also encourage other depository service providers to consider going public, thus enhancing the transparency and efficiency of the Indian capital market.

The NSDL share price and NSDL pre-IPO price have displayed positive advancements, indicating strong investor confidence.  National Securities Depository's unlisted shares price per share is ₹1010, with a face value of ₹2. The NSDL grey market price reflects expectations of significant gains upon listing. While NSDL continues to drive innovation and expand its presence, the funds raised from the IPO will help enhance its technology infrastructure, introduce new products, and venture into international markets.

NSDL Financial Performance 

NSDL has consistently demonstrated impressive financial performance over the years, largely due to its prominent role in the depository services sector. As of FY24, NSDL reported a sizable increase in the value of dematerialized securities, attaining ₹500 lakh crore (about USD 6 trillion). This milestone underscores NSDL's vital position in India's monetary market infrastructure. 

Financials (in ₹ Cr)	FY21	FY22	FY23	FY24
Revenue	482	771	1,021	1,268
Profit after Tax	188	212	234	275
EPS(₹)	47	10	11	13

NSDL Leading Position in Market

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NSDL holds a larger market share compared to CDSL in terms of the number of companies in each depository. The dematerialized securities are present with their both respective quantity and price.

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Conclusion

The approval of NSDL's ₹3,000 crore IPO by SEBI is a landmark event that highlights the developing maturity of India's capital marketplace. The importance of this public offering is reflected and presented by the participation of major investors such as NSE and HDFC Bank, as well as the reduction of shares by other significant shareholders. As NSDL gets ready to go public, both investors and market observers may be eagerly anticipating its performance, as it could establish a standard for future IPOs within the depository services sector.