Stock Market Selloff: NSDL IPO GMP Takes Hit; What SBI Securities, Anand Rathi Say
The Indian stock market is experiencing heightened volatility, with a significant selloff impacting both listed and unlisted markets as of July 28, 2025. Amid this turbulence, the much-anticipated initial public offering (IPO) of National Securities Depository Limited (NSDL), set to open for subscription on July 30, has seen its grey market premium (GMP) take a noticeable hit. Despite this, brokerage firms like SBI Securities and Anand Rathi remain largely optimistic about NSDL’s prospects, citing its strong fundamentals and strategic positioning in India’s growing financial ecosystem. This blog delves into the impact of the market selloff on NSDL’s IPO, the current GMP trends, and insights from leading brokerages.
Market Selloff and Its Impact on NSDL IPO GMP
The recent stock market selloff, driven by global economic uncertainties and domestic regulatory pressures, has sent ripples through India’s financial markets. The NSDL IPO, valued at ₹4,011.6 crore, is entirely an offer-for-sale (OFS) of 5.01 crore equity shares priced between ₹760 and ₹800 per share. Major shareholders, including the National Stock Exchange (NSE), IDBI Bank, State Bank of India (SBI), HDFC Bank, and Union Bank of India, are offloading their stakes to comply with SEBI’s regulation that no entity can hold more than a 15% stake in a depository company.
The grey market premium (GMP), an unofficial indicator of investor sentiment, has reflected the broader market’s volatility. Earlier this month, NSDL’s unlisted shares were trading at a peak of ₹1,275, but they have since corrected by approximately 20% to ₹1,025. As of July 28, 2025, the GMP for NSDL’s IPO stands at ₹135–₹147, suggesting a listing gain of 17–20% over the upper price band of ₹800. This is a significant drop from the ₹165–₹170 GMP recorded when NSDL filed its Red Herring Prospectus (RHP), highlighting the impact of the market downturn.
The decline in GMP follows a broader trend in the unlisted market, triggered by the recent HDB Financial Services IPO, which was priced at ₹740 per share—far below its grey market expectation of ₹1,225—resulting in a 40% loss for some investors. This has made investors more valuation-sensitive, contributing to the correction in NSDL’s unlisted share price from ₹1,250 to ₹1,025. Despite this, the GMP remains positive, indicating sustained investor interest ahead of the IPO’s opening on July 30, with a tentative listing date of August 6, 2025.
NSDL’s Strong Fundamentals
NSDL, India’s first and largest securities depository, plays a pivotal role in the country’s financial infrastructure by enabling the dematerialization and electronic transfer of securities. As of March 2025, NSDL held an 86.8% market share by demat value and serviced 99.99% of the demat value of Foreign Portfolio Investor (FPI) holdings in India. The company reported robust financial growth, with revenue, EBITDA, and profit after tax (PAT) growing at a CAGR of 17.9%, 21.2%, and 20.9% respectively over FY23–FY25. For FY25, NSDL recorded a net profit of ₹343.12 crore on revenue of ₹1,535.19 crore, up from ₹275.45 crore and ₹1,365.71 crore in FY24.
NSDL’s revenue model is notably stable, with over 60% derived from recurring sources like annual custody fees and fixed depository participant (DP) fees, which are insulated from market volatility. Additional revenue streams include licensing its DPM software, registrar and transfer agent (RTA) services, and its payments bank division, which recently acquired scheduled commercial bank status from the Reserve Bank of India. At the upper price band of ₹800, NSDL is valued at a price-to-earnings (P/E) ratio of 46.6x based on FY25 earnings, compared to its listed peer, Central Depository Services Limited (CDSL), which trades at 67x. This relatively attractive valuation underpins brokerages’ positive outlook.
What SBI Securities and Anand Rathi Say
SBI Securities
SBI Securities highlights NSDL’s stable, annuity-like revenue model as a key strength, noting that its recurring fees provide insulation from market cyclicality. The brokerage emphasizes NSDL’s dominant market position and its role in facilitating India’s equity culture. With a P/E of 47x FY25 earnings, SBI Securities views the IPO as reasonably priced compared to CDSL, making it an attractive investment for long-term investors. The brokerage also notes NSDL’s plans to expand its payments bank division and enhance digital banking services, which could further diversify revenue streams.
Anand Rathi
Anand Rathi Research remains bullish on NSDL’s growth prospects, citing its focus on modernizing IT infrastructure to enhance operational efficiency and resilience. The brokerage highlights NSDL’s plans to broaden its service offerings, strengthen database management, and increase the market share of its payments bank division. Anand Rathi views the IPO’s valuation—at a market cap of ₹16,000 crore and a return on net worth of 17.1% post-issue—as reasonable, given NSDL’s leadership in the depository space and its potential to capitalize on India’s growing financial markets. The brokerage recommends the IPO for investors seeking exposure to a market infrastructure institution with strong fundamentals and growth potential.
Risks to Consider
While the outlook remains positive, analysts have flagged potential risks. NSDL’s transaction-based revenue, particularly from delivery-based trades, is tied to market activity, which could be affected by external factors like economic slowdowns or regulatory changes. Additionally, the company’s reliance on complex IT systems makes it vulnerable to technical glitches or cybersecurity breaches, which could impact operations and reputation. Past regulatory scrutiny, such as issues linked to Karvy, and increasing competition from CDSL are also watchpoints for investors.
Investor Sentiment and IPO Details
The NSDL IPO has garnered significant attention, with 50% of shares reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and 35% for retail investors. A reservation of 85,000 shares for eligible employees offers a ₹76 per share discount. The minimum lot size is 18 shares, requiring a minimum investment of ₹13,680 for retail investors. The IPO is managed by lead book-running managers including ICICI Securities, Axis Capital, and SBI Capital Markets, with MUFG Intime India as the registrar.
Posts on X reflect mixed sentiment, with @business_today noting, “Stock market selloff: NSDL IPO GMP takes hit; what SBI Sec, Anand Rathi say,” underscoring the impact of market volatility on investor expectations. However, the positive GMP and brokerage recommendations suggest that NSDL remains a compelling opportunity despite the selloff.
Looking Ahead
The NSDL IPO comes at a challenging time for India’s stock market, with the selloff denting investor confidence and grey market premiums. However, NSDL’s strong market position, stable revenue model, and attractive valuation compared to CDSL make it a standout opportunity. Both SBI Securities and Anand Rathi advocate for its long-term potential, driven by India’s rising equity culture and NSDL’s strategic initiatives in technology and service expansion. Investors are advised to weigh the risks of market volatility and regulatory challenges but may find NSDL’s IPO a promising addition to their portfolios, with an expected listing gain of 17–20% on August 6, 2025.
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