The unlisted equity market in India is slowly taking its place to become a regular investment instrument among long-term investors. As businesses are presented with sound backing, institutional sponsorship, and a position of virtually having a monopoly in the market, this arena offers access to businesses whose value hasn’t seen IPO yet but early entrants. National Securities Depository Limited (NSDL) is one such company that has been the staple of investor discussion time in and time out, and a part of the Indian capital market- it has been the foundation of the same.
NSDL is the leader of the demat revolution in India that has enabled safe, paperless transactions in equity, debt securities, mutual funds and pension markets with a market capitalisation of more than 16800 crores. NSDL is the backbone of the Indian investing ecosystem and as the need to digitise the financial structure increases, the opportunity to invest in its unlisted shares will become truly special, potentially, before the stock is even listed.
Business Model Of NSDL
The first depository in India, National Securities Depository Limited, was instituted in the year 1996 and has established the pattern of secure electronic custody and transfer of securities in India. Marketed by the National Stock Exchange (NSE) and supported by major financial institutions including HDFC Bank, Axis Bank, IDBI Bank and UTI, NSDL has been instrumental in converting paper certificates to a smooth digital one.
NSDL provides a wide range of services today, among which are:
- More than 3.3 crore investors are maintained in terms of demat account maintenance
- Enabling the settlement of trade between different stock exchanges
- KYC registration, e-voting and e-signing
- As the NPS central recordkeeping agency, WEST keeps a complete record of NPS.
- Tax infrastructure services and corporate actions management of the company
The size of NSDL is not the only extraordinary thing on offer since the scale can also be witnessed in the trust earned by NSDL in an organised system that is in the service of government agencies, SEBI-registered intermediaries, mutual funds, and millions of retail customers.
Financial Analysis of NSDL Share Price
The unlisted market is already trading at the 850 range per share of NSDL. The company has robust valuation multiples of a healthy P/E ratio of 61.7 and Price-to-Book ratio of 10.1 given that it is already a leading financial services infrastructure business.
The revenue of NSDL has experienced a steady rise, supported by the rising investor inputs and dematerialisation penetration and transactional numbers. It has low operating overheads and records more than 60 per cent EBITDA margins, which help it to have strong retention of profits and decent dividends.
Balance Sheet Summary (FY2024)
- Total equity: 16841 Mn
- Cash & Equivalents: Rs. 1060 Mn
- Reserves: 16,441 Mn
- Overall Equity: 16841 Mn
- Debt: 221
NSDL boasts of a clean and liquid balance sheet, free cash flows, and, despite being a high-volume transaction business, which is very rare in the current markets.
Currently, the NSDL Unlisted Share Price is trading at Rs 850 per share.
Conclusion
NSDL has developed its reputation for reliability, safety and effectiveness within almost 30 years. With more and more investors coming to India and the increased regulatory focus on transparency, the services of NSDL are needed now as ever before.Â
The depository is profitable, has good governance, and a high-margin business model that puts it as one of the most reliable investments available in the unlisted market.
NSDL boasts of good fundamentals, government support, and is a regulated business, which makes it a defensive investment with growth potential. This is also a good option for high-quality personal equity when one is seeking to accumulate long-term wealth.
