National Securities Depository Ltd Q2 FY26 Concall Summary & Key Takeaways (NSDL)

National Securities Depository Ltd (NSDL) Q2FY26 Concall Summary - Sep-2025 Qtr

Annual Custody Fee Growth: The sharp sequential jump of INR 14 crore in custody fees was attributed to three main factors: 1) Growth from onboarding unlisted companies, where NSDL has a 73% market share. 2) An increase in the number of folios from 11.5 crore to 14 crore. 3) The introduction of an annual fee for its Distributed Ledger Technology (DLT) platform, which started in June 2025 and was charged to 600 corporates in Q2. Management clarified that recurring custody fees from listed and unlisted entities are now broadly equal in contribution.

Unlisted Companies Opportunity: Management indicated that the run rate for onboarding new unlisted companies is expected to slow down as the market has somewhat peaked, with nearly 1.4 lakh issuers already dematerialized. While NSDL aims to maintain its market share in the 70-72% range, the primary growth driver for this segment is shifting from new joining fees to recurring annual fees.

Incremental DEMAT Account Market Share: The drop in incremental account additions in October was attributed to seasonality, specifically a high number of festivals and holidays impacting DP operations. Management remains focused on acquiring new-age brokers and helping existing DPs improve their run rates. They expressed optimism about future market share gains due to ongoing efforts, including the onboarding of new fintech brokers from Gurgaon and Mumbai.

Breakdown of Revenue Streams: In response to a query, management clarified the revenue structure: approximately 43% is recurring (annual custody fees for listed/unlisted entities and DLT fees), and 57% is non-recurring (comprising six items, including transaction fees, corporate action fees, and joining fees). They committed to providing historical data with the new reporting breakup to analysts for better modeling.

Strategy for Attracting Large Brokers: The company's strategy is not solely predicated on convincing the top 3-4 discount brokers to switch depositories. While conversations are ongoing with one promising large broker, the primary focus is on onboarding new, high-potential fintech brokers who are just starting out. Management believes these new players could become significant contributors in the coming quarters as they scale up.

The company demonstrated strong operational performance, with the total number of DEMAT accounts crossing 4 crores to reach 4.19 million, reflecting an incremental run rate of 4.9% against an industry de-growth of 39%.

NSDL significantly increased its incremental market share in DEMAT account additions to 17.6% in Q2, a sharp rise from 9.9% in the same period last year, marking a 770 basis point improvement.

The company strengthened its leadership in the Unlisted Issuer Equity segment, achieving a market share of 73% and onboarding over 11,500 new companies during the quarter, surpassing a milestone of 1 lakh total issuers.

Financial performance was robust, with standalone total income growing 18.9% YoY to INR 250.6 crore and consolidated PAT increasing by 14.7% YoY to INR 110.3 crore, driven by growth in custody fees and corporate actions.

Strategic focus remains on technology enhancement, deepening retail investor participation, supporting regulatory initiatives, and driving value through subsidiaries, particularly the NSDL Payments Bank, which crossed 3 million customers.