NSDL share price factors in all the positive, Motilal Oswal says projecting downside

Brokerage firm Motilal Oswal has initiated coverage on NSDL with a 'Neutral' rating on Thursday, September 18.

Motilal has ascribed a price target of ₹1,200 for NSDL's shares, which implies a potential downside of 8% from current levels.

The brokerage said that while depositories operate in a duopoly market and NSDL enjoys superior pricing power, the stock appears fairly valued with most positives already factored in.

Motilal highlighted the long-term opportunities for India's capital markets, supported by rising financialisation but low penetration levels, demat penetration in India is just 15% compared with over 60% in the US.

As the country's first depository, NSDL is uniquely positioned to benefit, capturing both new retail investors entering the system and the rising custody value from institutional and corporate issuers.

NSDL dominates in institutional, custodian, and large corporate accounts, with revenue per active account at ₹157 in FY25, which is nearly three times that of rival CDSL. This institutional skew provides more stable revenue pools linked to custody value, offering resilience across market cycles.

The depository also services the widest base of issuers in India, including over 70% of unlisted corporates mandated to dematerialise. This generates recurring issuer charges and creates a sticky moat, as issuers rarely migrate once embedded in the demat system. With the unlisted corporate market expanding steadily, this remains a key growth driver, the brokerage said.

NSDL has recently sharpened its retail push by partnering with fintech brokers to enable digital onboarding in tier-2 and tier-3 cities. This has helped boost incremental demat market share from 10% in August 2024 to 17% in August 2025, though still below its overall 20% market share, leaving room for further expansion.

Motilal said NSDL's leadership in depository services, scale advantages, robust infrastructure, affluent client base, and strategic subsidiaries position it well to capitalise on structural growth.

The brokerage expects NSDL's revenue, operating profit and net profit to grow at 5%, 14% and 15% CAGR, respectively, over FY25-28.

Shares of NSDL settled 0.64% lower on Wednesday at ₹1,289.95 but have gained 7% over the past month.