NSDL Tech Spend Peaks in FY26; Custody Value Hits ₹477 Lakh Cr

NSDL reported that its technology capital expenditure peaked in FY26, with INR 106.1 crore capitalized. The company also manages a significant ₹477.29 lakh crore in securities as of the same fiscal year.

Key Financial Updates

NSDL provided an update on its fourth-quarter and full-year FY26 performance, emphasizing a stable market position and a period of strategic investment. The company highlighted its continued dominance in custody value, retaining 86% market share.

Fiscal year 2026 marked the highest point for technology capital expenditure, with INR 106.1 crore capitalized. A reduction in this spending is anticipated for the coming year, following core system upgrades. NSDL subsidiary NSDL Payments Bank also showed growth, exceeding INR 500 crore in deposits and reaching 43.5 lakh customers.

Strategic Importance

NSDL's strong custody market share forms a stable base for recurring revenue, providing resilience against market fluctuations. The conclusion of its peak technology investment phase suggests potential for improved profitability and operational efficiency starting in FY27.

Diversifying revenue streams through subsidiaries like the Payments Bank is a key strategy to expand NSDL's business beyond traditional depository services.

Digital Enhancements

NSDL has been actively upgrading its digital infrastructure. The company has launched over 40 APIs to simplify integration with its 311 Depository Participants (DPs) and enhance the customer experience. These technology upgrades aim to boost operational efficiency and improve service delivery across its offerings.

Future Outlook

Shareholders can expect technology capital expenditure to moderate from FY27 as the current investment cycle concludes. NSDL's strategic focus is shifting towards optimizing productivity from its existing workforce, rather than peak hiring. Contributions from subsidiaries are projected to increase, leading to a more varied profit mix for NSDL. The company is utilizing enhanced digital tools and APIs to better integrate with its network of Depository Participants.

Potential Risks

Regulatory actions affecting segments like the Payments Bank and NDML present a significant risk, potentially requiring business adjustments or fee changes. A slowdown in growth within the unlisted company segment has previously impacted custody fee performance. NSDL could also experience shifts in market share influenced by large IPOs that might disproportionately benefit competitors.

Peer Comparison

NSDL's primary competitor in India is Central Depository Services Limited (CDSL). While NSDL handles a significantly larger value of securities (86% market share by value), CDSL typically serves a greater number of individual demat accounts.

Key Figures for FY26

• Technology Capex: INR 106.1 crore
• Total Custody Value Managed: INR 477.29 lakh crore
• NSDL Payments Bank Deposits: Over INR 500 crore
• NSDL Demat Accounts: 4.44 crore
• New Depository Participants: 21 (Total: 311)

What to Watch Next

Investors will monitor the reduction in technology capital expenditure for FY27 compared to FY26's peak. Key developments concerning NSDL Payments Bank and NDML, alongside regulatory changes, will be important. NSDL's strategies to counter competitive pressures, particularly from fintech brokers, will also be closely watched. Analysis of trends in the unlisted segment and their impact on custody fee income, as well as the success of NSDL's diversification efforts, will provide further insight.