NSDL Q2 BOOM! Profit Jumps 15%, Brokerage Predicts Massive 11% Upside - What's Next?

Author

Abhay Singh | Whalesbook News Team

Detailed Coverage:

National Securities Depository Ltd (NSDL) announced its first quarterly results post-IPO, revealing a robust performance in its second quarter. The company's consolidated net profit grew by 15% year-on-year (YoY) to Rs 110 crore, compared to Rs 96 crore in the same period last year. Sequentially, profit increased by 23% from the previous quarter.

Revenue from operations saw a healthy 12% YoY jump to Rs 357 crore. NSDL's EBITDA for the quarter was Rs 15 crore, also up 12% YoY, with a margin of 36.7%.

Following the results, brokerage firm JM Financial has reiterated its 'ADD' rating on NSDL shares, setting a target price of Rs 1290. This target price implies an 11% potential upside from the current market price of Rs 1163.

JM Financial attributed the topline improvement to growth in NSDL's banking services and its payments bank business, which has shown strong traction with an improved customer base and significant CASA increase. Early efforts in UPI acquisition are also yielding results with new customer additions.

NSDL's depository business also exhibited strong growth. The company added 14 lakh demat accounts in Q2, bringing the total to 4.18 crore, a 3% increase quarter-on-quarter (QoQ). Recurring fees grew by 18% QoQ, driven by NSDL's dominant market share in the unlisted segment. Non-recurring revenue surged by a significant 86% QoQ.

Impact This news is positive for NSDL as it indicates strong operational performance and growth in key segments. The brokerage's 'ADD' rating and target price suggest continued investor confidence and potential for stock appreciation. The growth in demat accounts and recurring revenue highlights NSDL's strong market position and future earning potential. This could lead to increased investor interest and potentially higher stock valuations. Rating: 8/10

Difficult Terms: Consolidated Net Profit: The total profit of a company including its subsidiaries after all expenses and taxes. YoY (Year-on-Year): A comparison of financial data from one period to the same period in the previous year. QoQ (Quarter-on-Quarter): A comparison of financial data from one quarter to the previous quarter. EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization; a measure of a company's operating performance. CASA: Stands for Current Account Savings Account; refers to deposits that a bank holds in these accounts, which are typically low-cost. UPI (Unified Payments Interface): A real-time payment system developed by the National Payments Corporation of India. CAGR (Compound Annual Growth Rate): The average annual growth rate of an investment over a specified period longer than one year.