Neutral NSDL; target of Rs 800: Motilal Oswal
Moneycontrol • 1 day ago
Key Investment Pillars
- Robust operating efficiency: NSDL's operating revenue grew 36% YoY, with a strong contribution from banking services, which surged 66% YoY. The company's operating efficiency led to a beat on profitability, with EBITDA rising 11% YoY and a margin of 26.1%.
- Depository income rebound: Depository revenue grew 12% YoY and 25% QoQ, driven by improving market activity, with the share of recurring income improving to 44.7% of depository income.
- Banking services growth: Banking services revenue grew 66% YoY but dipped 7% QoQ, with a rising share in the revenue mix, and the company expects sustained momentum in demat account additions and successful onboarding of new fintech partners.
- Technology investments: NSDL has completed significant technology catch-up and is now shifting towards a build-up phase focused on innovation, product development, AI, and cybersecurity, which is expected to enhance productivity and support margin normalization over the medium term.
Thesis Validation Checklist
To validate the Neutral thesis on NSDL, investors should watch for: sustained momentum in demat account additions, successful onboarding of new fintech partners, improvement in operating efficiency, and progress in technology investments. Key signals to monitor include the growth of depository income, banking services revenue, and the company's ability to maintain its market share in the unlisted issuer segment.