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Shares of Central Depository Services (India) Ltd have fallen 13% in a week due to investor attention shifting to the upcoming IPO of rival National Securities Depository Ltd. NSDL's IPO has garnered strong institutional interest, with anchor investors subscribing to Rs 1,201 crore worth of shares. NSDL's dominance in institutional custody and infrastructure services, as well as its stable recurring revenue model, make it a compelling IPO opportunity. CDSL's rally has cooled as retail growth fades, and investors are re-evaluating its premium valuation.

Shares of Central Depository Services (India) Ltd (CDSL) have fallen by over 13% in a week, with a significant 1.8% dip on Thursday, as investor attention turns to the highly anticipated Initial Public Offering (IPO) of rival National Securities Depository Ltd (NSDL). The IPO of NSDL, which opened on July 30, has received strong institutional interest, with anchor investors subscribing to Rs 1,201 crore worth of shares [1].

NSDL's IPO, which consists entirely of an Offer for Sale (OFS) with shareholders divesting a total of 50.14 million equity shares worth nearly Rs 4,011.60 crore, has been oversubscribed nearly three times [2]. The grey market premium (GMP) for NSDL shares has remained steady at around 16.88% - 17.12%, reflecting investor confidence in the IPO.

The IPO has drawn comparisons to CDSL's multifold rally post-2017, which was fueled by a retail investing boom, particularly in the wake of the COVID-19 pandemic. However, CDSL's momentum appears to be tapering off as retail growth fades. On Monday, July 28, shares fell 4% after the company reported a 23.7% year-on-year decline in consolidated net profit to Rs 102.40 crore for Q1 FY26 [1].

Investors are now re-evaluating CDSL’s premium valuation in light of NSDL’s larger competitor’s public market debut. While CDSL has the edge in retail demat accounts, NSDL earns nearly three times more revenue per investor, an indicator of its superior operational efficiency [1].

NSDL's strengths lie in scale, institutional depth, and infrastructure, areas where it holds a definitive lead over CDSL. For long-term investors seeking exposure to India’s capital market backbone, particularly those aligned with infrastructure-led growth over retail momentum, NSDL may be worth a closer look. Meanwhile, CDSL may face short-term pressure as investors reassess valuation premiums in the evolving competitive landscape [1].

References:
[1] https://m.economictimes.com/markets/stocks/news/cdsl-shares-slide-13-in-one-week-as-nsdl-ipo-picks-pace/articleshow/123014040.cms
[2] https://www.business-standard.com/markets/news/nsdl-ipo-gmp-steady-at-17-despite-market-crash-on-trump-tariffs-125073100509_1.html