National Securities Depository Ltd Q4 FY2026 Concall Summary

Key Takeaways

• Market divergence defined the quarter: FIIs sold a record ₹1,270 crore in March while DIIs absorbed the shock with ₹1.4 lakh crore of inflows, and SIPs hit an all-time high of ₹32,000 crore monthly.
• Market share gains held despite a softer Q4: Incremental net demat share improved to 15.4% for FY26 from a much lower base last year, even as total new account additions industry-wide slowed sharply.
• The investment cycle has one more year to run: Technology capex and opex will stay at peak levels through FY27, with a decline promised only in FY28, while manpower additions have already peaked and will drop materially this year.
• Fintech DPs are switching sides: A large Pune-based fintech broker moved its entire book from the competitor to NSDL, and all new-age brokers registered last year onboarded as NSDL DPs, signalling a shift in market perception.
• What to watch next quarter: Whether the women’s demat plan gains traction, the pace of operating leverage as tech spend plateaus, and any movement on the stalled annual issuer fee increase with the regulator.

The FII-DII Divergence

• Record retail resilience: SIP flows reached an all-time monthly high of ₹32,000 crore in March 2026, up from ₹25,900 crore a year earlier, while DIIs pumped in ₹1.4 lakh crore in the same month, the highest ever.
• FII exodus accelerated: FPIs were net sellers through most of Q4, culminating in a record single-month outflow of USD 1,270 crore in March, driven by the West Asia conflict, crude spiking over 40% YoY at peak, rupee depreciation, and sustained capital outflows.
• Equity markets bore the brunt: The Nifty declined 11.3% by the end of Q4, with market activity subdued through January and February before March weakened further.
• Demat account growth slowed sharply: New demat account additions fell to approximately 3.2 crore in FY26 from 4.1 crore in FY25, with March 2026 recording the lowest monthly addition in nearly a year. IPO activity, at record levels for nine months, turned sluggish in Q4.

Vijay Chandok: "The defining story of quarter 4 was the divergence between the FIIs and the domestic flows."

Market Share & Competitive Position

• Incremental share improved materially: NSDL’s incremental market share in net demat account additions rose to 15.4% for FY26, up from a much lower level last year, with net additions of 49.4 lakh accounts versus 36.8 lakh in FY25, growing even as the overall market contracted.
• Q4 dip was episodic, not structural: Sequential incremental share slipped to 14% in Q4 from 14.7% in Q3, attributed to a specific large IPO that favoured the competitor and to bank-based DPs closing inoperative or dormant accounts at year-end. On a gross basis, share held steady.
• Fintech DPs are migrating to NSDL: One large Pune-based fintech broker that was previously attached to the competition has completely stopped and moved its entire book to NSDL, with volumes already scaling up. All new-age brokers registered last year onboarded as NSDL DPs.
• DP additions hit a record: 21 new DPs were added during the year, taking the total to 311, the highest annual addition ever.
• API lead widens: More than 40 APIs were launched during the quarter, expanding interoperability with clearing corporations and bond platforms, ahead of the competition.

Vijay Chandok: "Most of the new DPs that have come to us are fintech DPs now. So I think that initial resistance that I had — we had, rather NSDL had, of bad word of mouth is very certainly and gradually fading out in the market."

Revenue Drivers

• Custody fees saw phenomenal annual growth: Growth was partly driven by unlisted company activity in the first half, with a relative slowdown in the last two quarters. Future growth is linked to account sourcing and is expected to be secular.
• Banking services revenue jumped QoQ: The sharp increase reflects persistent focus on quality account sourcing that provides float, the introduction of transaction charges that crossed ₹43 lakh, and UPI acquisition business where expanded partners have begun paying fees. The Q3-to-Q4 jump is partly a gross-revenue effect from large throughput in the transaction banking model, with a corresponding expense-side offset.
• Pledge income is transaction-count driven, not value-driven: Revenue tracks the steady 5–7% growth in transaction count, not the ad valorem growth in the MTF book, which is expanding through larger ticket sizes rather than more pledges.
• Corporate action and IPO income declined QoQ: Q4 FY25 had benefited from a spike driven by a couple of IPOs with large bonus and rights issues; Q4 FY26 saw a static IPO count despite ₹18,000 crore of mobilization.
• Yuva plan now drives 21% of incremental sourcing: The plan, which waives settlement fees for three years, is treated as a nation-building initiative rather than a revenue line. Custody fees are still earned on these accounts.

Jigar Shah: "These are important services in the market infrastructure we've taken initiative to provide, as part of the nation-building exercise."

Technology & People Investment Cycle

• FY27 is the final year of peak spend: Technology capex and opex in FY27 will be very similar to FY26, with a marginal increase possible in opex. FY28 will definitely see a decline in capex as the multi-year investment story completes.
• Manpower additions have already peaked: Last year was the peak for headcount additions; this year will see much, much lower additions. The process of tightening the employee band started in April, and the company now expects productivity and returns from the workforce, supported by automation efforts completed this year.
• Intangible assets doubled: The increase is split across infrastructure for capacity resilience and augmentation, licenses and software for DP integration, and cybersecurity spending, including a SEBI-mandated clean air gap between the data centre and disaster recovery site.
• Operating leverage is the explicit thesis: Management is confident the business model carries inherent operating leverage, and that the investment in technology and people was necessary to avoid being left behind. As initiatives scale, financial outcomes are expected to strengthen.

Vijay Chandok: "We are very confident that this is an operating leverage business. And if you do not invest in technology and people, I think we will be left behind."

Subsidiaries & New Initiatives

• NDML demerger announced: The insurance repository business is being demerged into a new company, in accordance with IRDAI directions. Separately, SEZ pricing was revised in February, which is expected to support NDML’s operational performance in FY27.
• Women’s demat plan launched: Effective April 1, the plan offers a three-year settlement fee waiver to promote greater participation of women in capital markets. Management hopes it will gain traction over the quarters ahead.
• Revamped FPI and FVCI portal: Launched in October 2025, the digital portal simplifies onboarding and improves turnaround times for foreign investors, and is expected to consolidate NSDL’s position in the FPI market.
• E-voting market share gained: 5,287 e-voting events were conducted during the year, significantly higher than last year, with a gain in market share.
• Subsidiary growth outlook is cautious: Management declined to project whether NDML or Payments Bank contributions could double, citing repeated regulatory interventions that make forward views unreliable. The focus remains on diversification and risk-free growth.

Guidance & Commitments

Key Metrics