National Securities Depository Limited reported a 66% year-on-year revenue rise to INR 5.2 billion in the latest quarter, fueled by banking services. While revenue grew, increased operating costs led to a decline in EBITDA margins to 19.5%. Investors are tracking how banking transaction volumes and normalizing costs affect future profitability.
National Securities Depository Limited (NSDL) recently reported strong top-line growth, with operating revenue climbing to INR 5.2 billion in the latest quarter. This 66% year-on-year increase was primarily supported by the company's banking services segment, which contributed 61% of total revenue and saw a 136% growth compared to the same period last year. The depository business, which makes up about 35% of the revenue mix, also posted a steady 13% increase year-on-year.
Impact of Operating Costs on Profitability
Despite the significant rise in revenue, NSDL faced pressure on its bottom line due to a sharp increase in operating expenses. Costs rose by 92% year-on-year to INR 4.2 billion, driven by higher employee expenses and other operational costs. A portion of these costs is linked to a one-time card onboarding project in the banking services segment, which included fees shared with implementation partners. Consequently, the company's EBITDA (operating profit) grew by only 6% year-on-year to INR 1 billion, while the EBITDA margin narrowed to 19.5% from 30.5% in the prior year's corresponding quarter. Profit After Tax (PAT) reached approximately INR 983 million, representing a 10% year-on-year increase.
Future Outlook and Performance Metrics
Following these results, recent analysis from Motilal Oswal indicates that revenue from NSDL Payments Bank may normalize as the impact of the one-time project subsides. The brokerage has slightly adjusted its earnings estimates for FY27 and FY28 downward by 1% to 2% to account for the elevated expense structure. Looking ahead, expectations remain for a compound annual growth rate of 30% in revenue and 11% in both EBITDA and PAT over the FY26-FY28 period. The company's valuation is currently assessed against projected FY28 earnings, with the market focusing on a Price-to-Earnings (P/E) multiple of 40 times.
Investors are monitoring how the company manages its cost structure as it moves past the initial phase of its banking segment expansion. The key focus for the coming quarters will be whether NSDL can improve its profit margins as transaction volumes increase and expenses stabilize. Additionally, the ability of the depository segment to maintain its steady growth alongside the evolving banking business will remain an important area for shareholders to watch.