Unlocking the NSDL IPO: Is your money securely deposited in it?

Have you ever thought about who keeps your investment safe and sound in today's digital age? Back in the day, when shares looked something like this, 👇

…the responsibility of keeping them safe was squarely on your shoulders, just like safeguarding your important property documents. 😉

But times have changed, and so have our investment methods. Here's where National Securities Depository Limited (NSDL), the guardian of your financial fortress, swoops in to save the day! You see, with the creation of Demat accounts, where electronic shares are stored, the whole process has become smoother, making it easier for more people to invest in financial securities. Plus, it significantly reduces the risk of losing or damaging those important investment certificates.

NSDL is similar to a trusty vault for all things financial, making sure your stocks, bonds, and mutual funds are tucked away safely in the digital realm. 

It also offers its services to investors, stockbrokers, custodians, and even companies through a network of Depository Participants (DPs) and digital platforms.

NSDL is set to launch its Initial Public Offering (IPO), allowing you to get in on the action! In this article, we will explore the investment prospects it offers in its IPO.

So, if you're curious about how this financial guardian operates and how it impacts your investments, stick around. 

India’s Financial Evolution

India is on the fast track to economic success, ranking fifth in the world for its nominal GDP in 2023. Not just that, when you look at the Purchasing Power Parity (PPP), India stands as the world's third-largest economy, trailing only behind China and the United States. So, we're basically just a few cups of chai away from world domination. ☕️

India's capital markets have been on a wild ride. From 2017 to 2023, the total value of shares on the National Stock Exchange (NSE) saw a remarkable 14% annual growth.

What's more, the number of companies traded on the Bombay Stock Exchange (BSE) and NSE, particularly in the cash segments, jumped from 4,613 in 2017 to 6,466 in 2023. 

Shifting our focus to the Assets Under Management (AUM) of Mutual Funds, there's a noticeable upward trend, as illustrated in the image below 👇

What's driving all this growth? It's the depository system, which is closely tied to more people, from investors to brokers, jumping into the game. The rise of digital services has made capital markets accessible and cheaper for all. And with rising awareness of the world of finance, it's no wonder that more and more people are turning to financial assets for their investment adventures. 

But if you find yourself pondering which asset class is the right fit for your hard-earned money, fear not, dear reader! Dive into "Which Asset Class Should You Invest In?" for some guidance.

Now that you know this industry has great potential and can bring you good returns, let's learn more about the company.

NSDL: Company Overview

Take a step back to 1996 when NSDL was created by some big players: the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the National Stock Exchange (NSE). Their headquarters? Mumbai, the financial heart of India.

NSDL holds about 250 crore securities. It simplifies the way you transfer ownership of securities. Its main tasks are pretty straightforward:

• Record Keeping: The company keeps track of who owns what in the world of securities. It's all done electronically to make things easier, safer, and more efficient.
• Asset Care: NSDL ensures everything stays safe and well-managed.
• Services Galore: It handles a bunch of services, like turning paper securities into electronic ones, making sure trades settle smoothly, allowing you to pledge securities, and helping companies with corporate actions. Plus, it offers extra goodies like e-voting services and account statements.

Now, let's take a closer look at the dynamic duo in this market: NSDL and Central Depository Services (India) Limited. Time for a quick side-by-side comparison!  More like choosing between Batman and Superman for your financial superhero squad, but with less spandex. 😆

NSDL vs CDSL: A Market Face-Off

Let's cut to the chase and dive right into the numbers. Check out the graph below, which illustrates the evolution of companies signing up ⤵️

NSDL holds a higher share than CDSL in terms of the number of companies, as well as the quantity and value of securities held in Demat form. Now, turning our attention to the quantity of securities held, as shown in the chart below. ⤵️

No doubt about it; NSDL is the champion in the above comparisons. They have 69% of the market, while CDSL has 31%. They're practically everywhere, reaching over 99% of India's pin codes and stretching across 189 countries worldwide! Now, that's what you call a financial empire with a global footprint. 💪

Let's transition into exploring the company's financials.

NSDL’s Financial Journey

First up is Revenue, which is the total money a company rakes in from its sales. 

On the other side, we have Profit After Tax (PAT). This is the money a company has left in its pocket after covering all the bills, including those pesky taxes.

Take a glance at the chart below ⤵️ to see how these figures have been shaping up.

The trend here is pretty positive: the company's revenue and profits have been steadily on the rise over these three years. This could indicate a healthy and growing business. 📈

The table above signifies how the company's assets have evolved over the past three years. Assets represent what a company owns: the total value of all its stuff, including cash, buildings, and investments. 

IPO Details

The Bottom Line

As NSDL sets its sights on going public, it's not just about listing- it's a strategic move to fortify its position in the dynamic world of financial and securities markets. The company is all set to harness its impressive array of products and services to play a pivotal role in India's ever-evolving economy.

And when we look at the numbers, it's a tale of consistent growth. NSDL's assets have been steadily on the rise, showcasing a positive trend in its financial strength and overall value.

*Disclaimer: The stock discussed above aren't recommendations from Finology and shall not be construed as a replacement for professional advice. Consult a professional or conduct the necessary research before making an investment decision.