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The ₹4,011 crore issue, which is set to open for public subscription on Wednesday, is priced at ₹760-800 per share.”We believe the NSDL IPO is attractively priced, and would suggest investors subscribe to the issue,” said Geetanjali Kedia, IPO expert at SPTulsian Investment Adviser. “It operates in a duopoly within a growing Indian capital market, making it a good long-term bet as well.”
The issue is entirely an offer for sale by existing shareholders. The IPO is priced at 47 times FY25 Price to earnings (P/E), compared with its listed peer CDSL‘s 67 times, as per SBI Securities.
Narendra Solanki, head of Fundamental Research – Investment Services, Anand Rathi Shares and Stock Brokers, said investors could subscribe to the IPO and hold the stock for at least a year. “It should be noted that the issue is coming at a discount to the previously anticipated price,” he said.
The NSDL IPO, which was to debut on the Indian bourses by July 31, had been delayed due to lengthy negotiations around the stock valuations. Kedia said the IPO pricing adequately factors in NSDL’s relatively moderate financial position compared to CDSL, despite being a high ROE (return on equity) business with 24% net margins. In the grey market, NSDL currently commands a premium of Rs 137 per share. However, it has declined from Rs 166 on Thursday, the day before its price-band announcement.
The grey market premiums (GMPs) are the additional price that investors are willing to pay over the IPO price in the grey market before the stock lists on the stock exchange. A higher premium indicates the market sentiment for the IPO in question. GMPs of IPOs with robust demand tend to be high, which implies a potential upside in the stock on listing. A dampener for the NSDL’s IPO would be the weak first-quarter results from its larger rival CDSL. CDSL’s consolidated net profit in the June quarter rose 2% from the previous quarter. However, it declined nearly 24% from the same period a year ago. The stock dropped 5.6% on Monday. “CDSL’s weaker-than-expected results and a 5% stock drop may hamper some investor sentiment ahead of NSDL’s initial public offering, given both are Sebi-regulated depositories,” said Solanki. “In the near term, CDSL’s miss may weigh on NSDL’s debut, but over time, a successful NSDL listing could benefit both.”
