Twenty-five years ago, the National Securities Depository Limited (NSDL), which was India’s first and largest depository, made its debut on the stock market with a great deal of hoopla. Following a remarkable listing rally, during which the company’s stock increased by more than sixty percent in a matter of days, investors were taken aback to witness a rapid selloff following the results of the first quarter of fiscal year 26.
The shares of NSDL plunged by roughly 18% in just two trading sessions, which sparked concerns despite the fact that the company reported a 15% increase in net earnings. The question is, why did the stock experience such a significant decline, and what can investors do then? Let us dissect it in detail.
NSDL Q1 FY26 Results – Snapshot
Here’s a quick look at the reported financials:
| Financial Metric | Q1 FY26 Performance | YoY Change | Key Takeaway |
|---|---|---|---|
| Revenue from Operations | ₹312 crore | ↓ 7% | Weak topline growth |
| Net Profit (PAT) | ₹89.6-90 crore | ↑ 15% | Strong earnings |
| EBITDA Margin | ~30% | ↑ from 26% | Improved efficiency |
| Demat Accounts (Total) | 4+ crore | ↑ steadily | Growing market share |
(Source: Economic Times)
Key takeaway: While profits were healthy, the 7% decline in revenue disappointed investors.
Why Did NSDL Shares Sell Off After Q1?
There are several reasons behind the market’s reaction:
- Revenue Miss:
- Despite higher profits, NSDL’s revenue contracted.
- This indicated that the earnings growth came more from margin control than top-line expansion.
- Profit-Taking Post IPO Rally:
- NSDL listed at ₹800 and quickly soared to ₹1,425.
- Such rapid rallies often lead to heavy profit booking.
- Technical Levels:
- Analysts flagged ₹1,150 as a key support level.
- Breaching this support triggered additional selling pressure.
- Valuation Concerns:
- Trading at ~70-77× P/E, NSDL looked expensive compared to rival CDSL (~66×).
(Source: Moneycontrol)
Analyst Views on NSDL
Bearish Concerns
- Revenue contraction is worrying in a growth market.
- Valuations remain stretched post-IPO.
- Short-term volatility expected if the stock fails to hold above ₹1,150.
Bullish Arguments
- Strong margin expansion shows operational efficiency.
- India’s growing demat penetration is a structural tailwind.
- Long-term story of NSDL as a market leader remains intact.
(Source: Business Today)
NSDL vs CDSL – A Quick Comparison
| Factor | NSDL | CDSL |
|---|---|---|
| Market Share | 60%+ | 40% approx. |
| Demat Accounts | 4+ crore | 10+ crore |
| P/E Ratio (Post Q1 FY26) | 70-77× | ~66× |
| IPO Price | ₹800 | Listed long ago |
| Stock Trend Post Q1 | Sharp correction | Stable to slightly positive |
(Source: LiveMint)
Investor takeaway: NSDL is larger and dominant, but CDSL enjoys higher retail participation.
What Should Investors Do?
If You Already Hold NSDL Shares:
- Long-term horizon: Hold. Fundamentals are intact.
- Short-term traders: Use stop-loss around ₹1,150. Consider booking partial profits.
If You Are Looking to Enter:
- Avoid chasing the stock immediately.
- Look for buying opportunities near support levels (₹1,150-₹1,100).
- A sustained breakout above ₹1,220-₹1,250 with strong volumes could signal the next uptrend.
(Source: ET Markets)
Broader Market Sentiment
The selloff also reflects a larger trend: IPOs that rally aggressively often undergo post-listing corrections.
- In the unlisted market, NSDL shares had already fallen 21% from their highs even before Q1 results.
- This highlights that investor enthusiasm was cooling off after the debut euphoria.
(Source: ET IPO report)
Conclusion
The NSDL stock decline following the first quarter of FY26 reports is due to valuation worries, a revenue shortfall, and profit booking rather than poor fundamentals. As the market leader in India’s securities depository, NSDL is still a good choice for investors looking to hold on to their money for the long haul. Nonetheless, you should adhere to controlled entry/exit levels because short-term volatility is probable.
Patience may be rewarded if you are committed to the long term. Traders should hold off on placing new bets until consolidation has taken place.
