National Securities Depository Ltd Q3 FY2026 Concall Summary

Key Takeaways

• Depository core steady, bank leverage emerging: Standalone revenue grew 14% YoY despite a seasonally soft quarter, while the Payments Bank’s segment profit swung from INR2 crores to INR14 crores over nine months on strong operating leverage.
• Demat market share structurally higher: NSDL’s incremental Demat account market share hit 15.89% for nine months, up sharply from the prior year, though a QoQ dip was episodic and IPO-linked.
• Regulatory change reshapes fee mix: A lower threshold for mandatory dematerialisation pulled forward issuer additions, leaving the joining-fee run rate uncertain for the next few quarters.
• Payments Bank stake sale sets a benchmark: Protean’s acquisition of a 4.95% stake valued the bank at ~INR580 crores, and the fresh capital will fund technology upgrades for a medium-term build-out.
• What to watch next quarter: Whether the new fintech DPs begin scaling materially, any clarity on the joining-fee trajectory, and the Payments Bank’s ability to sustain its profit momentum.

Market Backdrop & Volume Trends

• FII outflows met by domestic inflows: Persistent FII selling was absorbed by domestic institutional investors, with net inflow of about INR7.8 lakh crores, largely supported by robust SIP flows, producing relative market resilience.
• Cash market volumes flat: Subdued investor interest, particularly in mid-cap and small-cap segments, and volatility kept cash market volumes flat versus the prior-year comparable period.
• Primary market stayed active: Markets raised about USD1,080 crore through 125 IPOs in the quarter, continuing strong investor participation on the primary side.
• Industry Demat growth decelerated: The market added 89 lakh Demat accounts in Q3 FY26 versus 99 lakh in Q3 FY25, with total industry Demat accounts reaching 21.59 crores.

Chandok: "The above divergence that I just highlighted between the behaviour of the FIIs and the domestic institutional investors has led to relative market resilience and it is important to underscore this point."

Depository Business & Market Share

• NSDL Demat accounts grew against industry degrowth: NSDL reached 4.32 crores Demat accounts and added roughly 8-9 lakh accounts in a quarter when the industry showed degrowth, driven by digitisation, deeper penetration with existing DPs, and new DPs scaling up.
• Incremental market share structurally higher: Nine-month incremental market share in net Demat accounts stood at 15.89%, up from the prior year; the Q3 figure of 14.65% was down sequentially but management attributed the move to episodic, high-profile IPO flows that temporarily favoured discount brokers over bank-based brokers.
• Custody value dominance: NSDL holds 86% of the value of custody, managing about \$527 trillion of securities, of which 81% is in equity.
• Issuer milestone crossed: NSDL crossed 1 lakh issuers, helped by the MCA revising the minimum threshold for dematerialising non-small companies, which pulled forward additions.
• Custody fee growth to moderate: Growth will continue from new companies getting dematerialised, but at a slower rate than the past year because the eligible universe has shrunk materially after the regulatory change.
• Revenue per Demat directionally lower: Management expects the metric (currently INR156-160) to decline directionally and then, over a few years, start improving as economic progress occurs.
• New DP pipeline building: Six new DPs were added, including fintech players, and a Pune-based fintech recently switched over and began adding accounts; management is in talks with meaningfully large Demat players, some of whom have started integration, with scale-up expected over the next few quarters.
• YUva scheme gaining share: The scheme initially garnered ~10% of Demat accounts and is now getting 20%.

Chandok: "Specifically, quarter 3 to quarter 4 -- quarter 2 to quarter 3, the change that you have seen in the Demat account market share is to our mind and analysis is actually more, I would say, episodic and linked with certain very highly sought after and high profile IPOs that came, which always leads to a little bit of surge of business."

Revenue & Profitability

• Standalone revenue seasonally soft: Revenue from operations was INR169 crores, up 14% YoY but down 17% sequentially, with the sequential decline driven by seasonality in e-voting and dividend receipts from subsidiaries concentrated in Q2.
• PAT held flat by a one-time tax item: Profit after tax was broadly unchanged; excluding a one-time non-recurring tax item, profit would have been higher by 10.3%.
• Consolidated performance: Total income was broadly flat YoY; PAT was up 4.5%, or 13.3% excluding the tax impact.
• IPO revenue flattish: IPO revenue came in at roughly INR25 crores, flattish YoY, with Q2 having had a slightly better pipeline.
• Other transaction income declined: The drop was primarily due to lower joining fees from unlisted companies after the regulatory change; joining fees fell from roughly 11,000 companies added in the previous quarter to 4,400 this quarter.
• Joining-fee run rate uncertain: Management is taking a cautious approach and cannot predict a real number, waiting a few quarters for the ecosystem to unfold.

Payments Bank: Operating Leverage Kicking In

• Revenue line is gross, not net: The high revenue figure includes commissions payable to business correspondents, so the contribution to the bottom line must be viewed after stripping those out.
• Profit growth was considerable: Segment results from banking services moved from INR2 crores to INR14 crores over the last nine months, driven by a combination of UPI acquiring volumes (now above INR30,000 crores) and CASA margin improvement (CASA above INR475 crores).
• Operating leverage is the story: Management emphasised that the multiple on growth is what the business offers, rather than percentage growth on a YoY basis, given its strong operating leverage.
• Stake sale sets a valuation benchmark: Protean e-Governance acquired a 4.95% stake for about INR30 crores, valuing the bank at approximately INR580 crores; the fresh equity will strengthen the capital base for technology investments.
• Momentum cautiously held: Management is hopeful and cautious about maintaining the profit momentum but is not targeting a specific number.

Chandok: "It's a strong operating leverage business model. So, the multiple on growth is what this business tends to offer rather than percentage growth on a Y-o-Y basis."

E-Voting, Products & Regulatory Alignment

• E-voting leadership and seasonality: NSDL emerged as the market leader in e-voting; revenue declined sequentially because most results and AGMs concentrate in Q2, with Q3 and Q4 progressively lighter, and the event mix and shareholder count also vary.
• Speedy feature launched: An integrated feature in the investor app now displays proxy advisory recommendations alongside e-voting ballots.
• Product and system enhancements: The quarter saw digital Demat for HUF joint accounts, an enhanced BSDA facility, the first SIF allotment, a GCEX API enhancement for value-free transfer of government securities, and a margin pledge system enhancement to help DPs offer MTF facilities.
• Investor awareness at scale: Joint campaigns with SEBI under "Raho Digitally Chaukanna" reached close to 8 crore investors; NSDL conducts about 2,500 investor awareness programs annually, reaching over 1.5 lakh participants across Tier 1-5 cities.
• Aligned to SEBI’s expansion vision: SEBI laid out a plan to bring another 10 crore investors into the market over the next three to five years, and NSDL continues to align its technology and process innovation to that vision.

Guidance & Commitments

Key Metrics