Whalesbook
National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), two key players in India's capital markets, have released their financial results for the September quarter (Q2FY26), revealing contrasting performances.
Q2FY26 Performance Analysis:
NSDL posted a stable growth, with its consolidated net profit increasing by 14.6% year-on-year to Rs 110 crore. This profit growth was underpinned by a 12% rise in revenue. The company also demonstrated steady operating margins and a significant 21% surge in income from investments during the quarter.
Conversely, CDSL experienced a downturn. Its net profit fell by 13.6% compared to the previous year, reaching Rs 140.21 crore from Rs 162 crore. The company's revenue saw a slight slip, while its expenses moved higher, thereby impacting overall profitability.
Dividend Announcements:
Following its listing, NSDL declared its first dividend as a public company, announcing Rs 2 per share for Q2FY26. Additionally, it received Rs 18.3 crore in dividends from its subsidiary, NSDL Database Management Limited (NDML). CDSL announced a dividend of Rs 12.50 per share for the quarter ended September 2025.
Brokerage Outlook:
Financial services firm Motilal Oswal maintained a neutral stance on both depositories. For NSDL, it retained a Neutral rating with a target price of Rs 1,270, suggesting an 11% potential upside. The brokerage anticipates steady growth in NSDL's revenue, EBITDA, and net profit over the next three years, driven by increased custody fees, rising participation from banks, and adoption of digital record-keeping technologies.
Motilal Oswal also kept a Neutral rating on CDSL with a target price of Rs 1,520, indicating a potential downside of 5% from the current market price. While CDSL benefits from continuous new demat account openings and more unlisted companies joining its platform, higher spending on technology and employee expansion may curb near-term operational gains. Earnings estimates for FY26 were revised upwards, but projections for FY27 and FY28 remain unchanged due to ongoing cost pressures.
Share Price Performance:
As of the reporting period, NSDL shares were trading approximately 1% lower, having slipped nearly 3% in the past month. However, the stock has gained around 21% year-to-date in 2025. CDSL's stock was trading flat with a slight uptick of 0.4%. It has fallen 2% in the last five days and is down approximately 11% year-to-date in 2025, despite a marginal gain over the past month.
Impact:
This news is highly relevant for investors in the Indian stock market, especially those interested in the financial services and capital markets infrastructure sectors. The contrasting performance of NSDL and CDSL provides insights into the operational health and future prospects of depositories, influencing investment decisions. The brokerage reports offer specific outlooks and potential price movements, guiding market participants.
Rating: 8/10
Definitions:
- Depository: An organization that holds financial securities (like shares and bonds) in electronic form on behalf of investors. NSDL and CDSL are India's primary depositories.
- Demat Account: A dematerialized account used to hold shares and other securities in an electronic format.
- Consolidated Net Profit: The total profit of a company after deducting all expenses, taxes, and interest, including the profits of its subsidiaries, reported as a single figure.
- Revenue: The total income generated by a company from its normal business operations, usually from the sale of goods and services.
- Operating Margins: A profitability ratio that shows how much profit a company makes on a dollar of sales after paying for variable costs of production, but before paying interest or tax.
- Income from Investments: Earnings generated from a company's holdings in stocks, bonds, or other financial instruments.
- Dividend: A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
- Subsidiary: A company controlled by another company (the parent company).
- Brokerage Firm: A company that acts as an intermediary for buyers and sellers of securities.
- Neutral Stance/Rating: An investment recommendation by an analyst or firm suggesting that the stock is neither a strong buy nor a strong sell; it is expected to perform in line with its peers or the market.
- Target Price: The price at which an analyst or brokerage firm believes a stock will trade in the future, typically within a year.
- Upside/Downside: Refers to the potential percentage increase (upside) or decrease (downside) in a stock's price from its current level to its target price.
- EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of a company's operating performance.
- Profit After Tax (PAT): The net profit of a company after all taxes have been deducted.
- Custody Fees: Fees charged by a custodian (like a depository) for holding and safeguarding securities.
- Digital Record-Keeping Technologies: Systems and software used to maintain and manage records electronically.
- Unlisted Companies: Companies whose shares are not traded on a public stock exchange.
- Operational Gains: Improvements in efficiency or profitability resulting directly from a company's core business operations.
- Earnings Estimates: Projections made by analysts about a company's future financial performance, particularly its earnings per share.
- Cost Pressures: Factors that lead to an increase in the expenses or costs incurred by a company.
- 52-week Range: The highest and lowest price at which a stock has traded during the preceding 52 weeks.