NSDL IPO: Price Band, Valuations, Peer Comparison, Financials, Risks & Other Key Details — Anand Rathi Report

NSDL's IPO will open for subscription on July 30 and the offer closes on August 01. The SEBI-registered market infrastructure institution has fixed the price band in the range of Rs 760 and Rs 800 per equity share.

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Anand Rathi Report

National Securities Depository Ltd.'s initial public offering will open for subscription on July 30 and the offer closes on August 01. The SEBI-registered market infrastructure institution has fixed the price band in the range of Rs 760 and Rs 800 per equity share.

NSDL IPO is a book-building issue worth Rs 4,011.6 crore. It comprises entirely an offer-for-sale of 5.01 crore shares with no component of fresh issue.

Investors can place bids starting from a minimum of 18 shares and in multiples thereafter.

ICICI Securities Ltd., Axis Capital Ltd., HSBC Securities and Capital Markets (India) Private Ltd., IDBI Capital Markets and Securities Ltd., Motilal Oswal Investment Advisors Ltd., SBI Capital Markets Ltd. are the book-running lead managers for the public issue.

Valuation:

NSDL will maintain its focus on unlocking growth opportunities and deepening market reach by utilizing its core competencies. The company plans to strengthen and modernize its IT infrastructure to improve operational efficiency, elevate service standards, and bolster resilience.

Additionally, it aims to broaden its range of services, enhance its database management capabilities, and expand the market share of its payments bank division.

At the upper price band company is valuing at P/E of 46.6x to its FY25 earnings, and market cap of Rs 1,60,000 million with Return on net worth of 17.1% post issue of equity shares.

We believe that the IPO is fairly priced and recommend a “Subscribe” rating to the IPO.

Key Risk:

• If there is a shift in investor preferences away from investing and trading in securities to other avenues, it could reduce demand for their services and adversely affect their business, financial condition, and results of operations.

• Failure to expand their service offerings and market reach through continued innovation and development of new products and services through technology-based solutions or the failure of these new service offerings may have an adverse impact on their business.

• A large proportion of their Company's business is transaction-based, in particular, delivery-based, and dependent on trading activity in the securities market. External factors beyond their control may affect the trading volumes which could adversely affect their business, cash flows, results of operation and financial condition.

• Company rely on complex information technology networks and systems to operate their business. Any significant system or network disruption due to a technical glitch, breach in the security of their IT systems or otherwise, could have a negative impact on their business, reputation, results of operation and financial condition including levy of financial disincentive by SEBI.

• Company operate under a stringent regulatory regime and their inability to comply with their legal and regulatory obligations may expose them to regulatory proceedings and legal actions by the Securities and Exchange Board of India.

• Company closely compete with their competitors across their businesses in a highly regulated environment. Any failure to compete successfully could have an adverse effect on their business, financial condition, cash flows and results of operations.

• Company depend on their network of depository participants and the service centres owned, operated and maintained by such depository participants for a large portion of their business. Any inability to effectively manage and increase this network could adversely impact their growth, cash flows, results of operation, and financial condition.

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