NSDL shares trade 61% higher than the IPO price, but Motilal Oswal sees no room for further rally. Here's why

Domestic brokerage firm Motilal Oswal, in his latest report, began coverage of NSDL, the country’s first deposit, with a ‘neutral’ rating and a target price of £ 1,200, indicating an 8% disadvantage of the latest closing price. Although the broker remains optimistic about the company’s long-term growth prospects-which impedes its leadership in deposit services, robust infrastructure, scale benefits, wealthy customer base and strategic subsidiaries that the share is fairly valued and that all positive people have already been priced at current levels. “However, given the duopoly nature of the industry and the excellent price power of NSDL, deposits earn premium valuations. However, we believe that the stock is quite valued, and that all the positive is priced at current levels,” the broker said. The broker emphasized the long -term potential of NSDL, pointing out that Demat’s penetration in India is still only 15% compared to 60% in the US. Motilal Oswal believes that NSDL is uniquely positioned to capture both the width of new retail investors entering the system and the depth of rising supervision value of institutional and corporate issuers. NSDL dominates institutional, custodian and large corporate accounts, leading to revenue per active account of £ 157 in FY25 – three more times that of CDSL. This institutional skew, the observed broker, offers more stable income pools linked to supervision value rather than pure transaction volumes, thus supporting the resilience in the market cycles. The deposit also serves the largest basis of issuers in India, including more than 70% of the unlisted businesses that instruct to dematerialize. It not only generates stable, recurring costs of issuers, but also creates a sticky grave, as issuers rarely migrate as soon as demat systems are embedded. The growth potential here is significant, given the steady expansion of the unlisted market in India. In addition to its core payment business, the broker said that NDSL developed meaningful adjustments through its subsidiaries – NSDL Database Management Ltd. (NDML) and NSDL Payments Bank Ltd. (NPBL). Together, these entities contributed 55% of consolidated revenue in FY25, underlining their increasing stake in NSDL’s overall business mix. Motilal Oswal expects the company to deliver revenue, EBITDA and Pat CAGR of 5%, 14%and 15%respectively, more than FY25–28, which reflects its strong market position, diversified revenue streams and growth potential in India’s expanding capital markets. Operational efficiency and a technical guided upside are also expected to improve ebitda margins in the same period. NSDL share price has 61% higher than the IPO price. The share made its stock market debut in August 2025, with a list of 880 each against the issue of £ 800 and it still holds the same momentum in the next session to reach £ 1.425 each. At the current levels of £ 1290, the share trades 61.25% higher than the issue price, but 9.5% below the recent high. Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or brokerage companies, and not of currency. We advise investors to check with certified experts before making investment decisions.