💰 Financial Performance

Revenue Growth by Segment

Standalone Revenue from Operations reached INR 204.2 Cr in Q2 FY26, growing 20.7% YoY. Recurring revenue (43.4% of total) was driven by Annual Custody Fees which grew 44% YoY to INR 88.7 Cr. Non-recurring revenue (56.6% of total) saw e-Voting grow 25.3% YoY to INR 28.9 Cr, while Settlement Fees declined 35.6% YoY to INR 13.9 Cr.

Geographic Revenue Split

100% of revenue is derived from India, with a growing contribution from the GIFT City international hub via IIDL, which services 64,848 clients holding Unsecured Depository Receipts (UDRs).

Profitability Margins

Standalone PAT margin stood at 48.1% in Q2 FY26, while Consolidated PAT margin was 25.5%. Standalone margins are significantly higher due to the high-margin nature of core depository services compared to diversified subsidiary operations.

EBITDA Margin

Standalone EBITDA margin was 64.1% in Q2 FY26, an improvement from 60.5% in Q1 FY26. Excluding dividends from subsidiaries, the core operating EBITDA margin stood at 61.3%.

Capital Expenditure

The company invested INR 30 Cr in H1 FY26 primarily for technology infrastructure, capacity building, and core depository strengthening.

Credit Rating & Borrowing

Debt-Equity Ratio is N.A. as the company has zero debt. It is a net lender, earning Finance Income of INR 28.1 Cr in Q2 FY26 from its investment portfolio.

⚙️ Operational Drivers

Raw Materials

Not applicable for a financial utility; primary cost drivers are Employee Benefits (INR 28.7 Cr, 11.5% of total income) and Technology Expenses (INR 21.3 Cr, 8.5% of total income).

Capacity Expansion

Current infrastructure supports 41.9 million demat accounts and 14 crore folios. Expansion is focused on the unlisted segment, with 11,000 companies onboarded in Q2 FY26 to reach a 73% market share.

Raw Material Costs

Not applicable; however, technology-related expenses grew 27% YoY to INR 21.3 Cr in Q2 FY26 due to front-loaded investments in capacity and security.

Manufacturing Efficiency

Operating Profit Margin of 52.8% (Standalone) in Q2 FY26 reflects high scalability of the digital depository model as volumes increase.

📈 Strategic Growth

Expected Growth Rate

20%

Growth Strategy

Growth will be achieved by leveraging the mandatory dematerialization of unlisted companies where NSDL holds a 73% market share. The company is diversifying revenue through blockchain-based Distributed Ledger Technology (DLT) fees and expanding GIFT City operations (IIDL). It is also front-loading technology capex (INR 30 Cr in H1 FY26) to handle the 21.7% growth in folios (to 14 Cr) and exploring mutual fund units as loan collateral.

Products & Services

Demat accounts, Custody services, e-Voting, Settlement of market and off-market transfers, Pledge/Margin pledge, Distributed Ledger Technology (DLT) for bonds, and Unsecured Depository Receipts (UDRs).

Brand Portfolio

NSDL, IDeAS, SPEED-e, STEADY, IIDL, NDML.

New Products/Services

DLT ledger platform for bond monitoring (launched June 2025) and Unsecured Depository Receipts (UDRs) for NASDAQ/NYSE listed companies in GIFT City.

Market Expansion

Aggressive onboarding of unlisted companies (22,000 in H1 FY26) and expansion of the IIDL client base in GIFT City (currently 64,848 clients).

Market Share & Ranking

#1 in Total Demat Custody Value (86.3% market share); #1 in FPI Demat Holdings (99.99%); #1 in Unlisted Company Equity Value (90.07%).

Strategic Alliances

Strategic collaboration with subsidiary NDML (contributed INR 18.3 Cr dividend) and partnerships with over 270 Depository Participants.

🌍 External Factors

Industry Trends

The industry is shifting toward total dematerialization of all financial assets. While new demat account openings moderated to 14.62 million in H1 FY26 (down from 24.05 million), the primary market remains robust with INR 710.9 billion raised, supporting NSDL's value-based leadership.

Competitive Landscape

Primary competition from CDSL, particularly in retail demat account growth and unlisted ISIN issuance, though NSDL maintains dominance in value and institutional segments.

Competitive Moat

Durable moat through 86.3% custody value market share and 99.99% FPI holding share. The network effect of 270+ DPs and high trust requirements in a depository system make these advantages highly sustainable.

Macro Economic Sensitivity

Highly sensitive to capital market activity; ADTO in the cash segment was INR 66.3 trillion in Q2 FY26, which directly impacts settlement and transaction fee revenue.

Consumer Behavior

Increasing retail interest in IPOs and a shift toward using dematerialized securities as collateral for instant loans (Digital LAS).

Geopolitical Risks

Global volatility affecting FPI flows, which is critical as NSDL manages 99.99% of FPI demat holdings valued at $5.68 trillion.

⚖️ Regulatory & Governance

Industry Regulations

Compliance with the Companies Act 2013 and Information Technology Act for data protection. Adherence to these standards is vital for maintaining the 'clean air gap' security for 41.9 million accounts.

Taxation Policy Impact

Effective tax rate of approximately 21.8% based on Q2 FY26 standalone PBT of INR 154.1 Cr and tax expense of INR 33.7 Cr.

Legal Contingencies

Nil sexual harassment complaints filed or pending during the year. No other material legal case values were disclosed in the provided documents.

⚠️ Risk Analysis

Key Uncertainties

Market volatility impacting the 56.6% non-recurring revenue base and potential market share erosion in the unlisted ISIN issuance segment.

Geographic Concentration Risk

100% revenue concentration in India.

Third Party Dependencies

High dependency on Depository Participants (DPs) for the operational reliability of investor services.

Technology Obsolescence Risk

Mitigated by INR 30 Cr capex in H1 FY26 for technology front-loading and blockchain adoption for bond monitoring.

Credit & Counterparty Risk

Low risk; Trade Receivables Turnover Ratio of 8.06 reflects high quality, as a significant portion of fees are billed in advance.