ICICI Securities Maintains 'Hold' Recommendation on National Securities Depository, Targets Price of Rs 840

National Securities Depository: A Long-Term Play on Indian Capital Markets

National Securities Depository (NSDL) has established itself as a key player in the Indian capital markets, providing depository services to a diverse range of clients, including investors, issuers, depository participants, financial institutions, stockbrokers, custodians, clearing corporations, and other market intermediaries through an integrated platform.

As of FY26, NSDL's revenue model is split 50/50 between recurring and transaction revenue, indicating a stable and predictable income stream. The company's business model is characterized by a duopoly-like structure, which is capital-light and has a healthy Return on Equity (RoE). This setup presents a compelling case for long-term, relatively safe compounding potential, with the added optionality for market share gains.

A key factor driving NSDL's growth prospects is its strong new management team and a fresh focus on enhancing digital capabilities. This strategic shift is expected to bolster the company's competitive position and drive future growth. However, market momentum, which can be both positive and negative, presents potential upside and downside risks that investors need to be aware of.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Outlook and Recommendation

Our research team at ICICI Securities maintains a HOLD recommendation for NSDL, with a revised Target Price (TP) of INR 840, based on a conservative estimate of 35x FY28E core Earnings Per Share (EPS) of INR 18.8. This revised TP is a result of our reevaluation of the company's growth prospects and valuation multiples.