Introductions
Bro, the market is fun, and it gets even more exciting if we try to understand things a bit deeper. Take the NSDL case for example. The company launched its IPO at ₹800 per share. It was the most awaited IPO. People were eagerly waiting for it, thinking they might see a 50-60% GMP. They expected this IPO to double their money. But what actually happened? The GMP was just around 15%. The grey market premium was about that much. The subscription numbers were good, the names involved were big, and people were definitely interested.
People wanted to invest. CDSL had already given returns, so people applied. There were tons of applications—about 4.7 million. Out of those 4.7 million, around 974,000 people got allotments, roughly close to a million. But then there’s another twist. The tendency of retail investors is that once they make a profit, they sell quickly to avoid any losses. That’s something we saw here. Also, when an IPO gets listed in the market, there’s usually a rally for the first three days—almost hitting the upper circuit limit.
The upper circuit is hitting, and right now the price has already reached ₹1300 per share. The problem is pretty big. People are getting really FOMO. So, what should we do now? Look, there are two types of people. First, those who got an IPO allotment but sold some shares for a small profit on listing day. Now they're feeling FOMO, wishing they had held on. The second type didn't get any allotment and didn't buy after listing either, so they're just watching from the sidelines. The third type is the one who got the allotment or...
He must have bought it after the listing. He’s still holding onto it. Right now, he’s not sure how long this big surge we’re seeing here can last. Should we get out now or not? You’ll find answers to all these questions in this video. So, I have just one request for you. I’m not asking for likes. I’m saying, focus and understand, because the things I’m going to explain to you—why this happened—you’ll get it clearly. Also, I’ve got an awesome listing day strategy...
I already sent the video. Those who have watched and understood it must have got a good idea by now. The rest is up to you to decide. My job is to provide the data, and in this video, I’m going to give you plenty of data. Alright? So, pay close attention and try to understand everything clearly. First of all, I won’t drag on too much about NSDL’s business. Let me be clear—it’s a depository. We buy shares through brokers, and those shares get stored in the depository. There are two depositories: NSDL and CDSL. They’re basically companies. Now, get this—I’ve also made videos about this in my previous reels.
Bro, don’t overlook proxy companies. Any proxy company in the stock market eventually makes a profit. Whether you’re a trader, an investor, making money or losing money in the market, it doesn’t matter to them. As the craze for the stock market grows in India, and more money flows in—especially with systematic investments happening—these companies are definitely going to benefit. That’s probably why the market values these companies so highly.
It gives more. In the past, BS shares were flying off the shelves. CDSL shares were flying off too. First, let’s try to decode the growth of NSL. For that, we need to take a step back. We have to understand its pre-IPO shareholding pattern and free float market cap. First, get this: it's a proxy company for the stock market. SEBI has a rule because of which companies like BSE, NSE, NSDL, and even NSE’s IPO were delayed since they fall under the MII category. Market infrastructure institutions—SEBI treats them differently.
The rules are different. So SEBI had a rule for them. Just understand it like this: any bank, insurance company, or exchange can’t hold more than 15% stake in these kinds of companies, like MII companies. Now, let’s understand what stake means, and then we’ll talk about how KYC was played here. You know the operator’s game, right? That operator game runs on logic. You gotta get that. Alright? Let’s first look at the pre-IPO shareholding pattern of this company—IDBI Bank, okay? Its shares are in NSDL.
The holding was 26%. Moving on. Next up is NSC. I’ll talk more about NSC later. There’s a big opportunity opening up here because of NSDL. NSC itself is an MII category company, meaning whether people make money or not, the exchange still gets its cut—the transaction charge goes through. So, we need to keep that in mind. NSC had about a 24% stake. HDFC Bank had around a 9% stake. Moving on, SBI had about a 5% stake. According to SEBI rules, IDBI Bank and NSC have 15% from now on.
They couldn’t hold on to more shares. That’s why SEBI gave them a deadline: get listed on the market before July 31. So what did they do? They decided, okay, let’s do an Offer for Sale (OFS) now. NSDL wasn’t already listed in the market. This applies to companies where institutions don’t already hold shares. These institutions want to hold such companies long-term because they know if they invest in these companies, they’ll make strong profits. That’s why people are interested—call it BS, or NSC.
Alright, listen up. Whether it’s CDSL or any of these companies, there’s a lot going on. Got it? So, IDBI Bank did an OFS of 22.2 million shares. Then, NSC did an OFS of 18 million shares. HDFC did an OFS of 4 million shares. Okay? SBI did a total OFS of 2 million shares. Altogether, they offered 50.1 million shares for sale, which amounts to around 4,000 crores. Now, moving on, their shareholding has come down to 14.99%. Moving ahead, NSC’s shareholding is now 14%, HDFC’s is 7.95%, and SBI’s is down to 4%.
Alright. Now, pay close attention. Right now, NSC's shareholding in NSDL is about 14%. We'll understand this further ahead. Okay? This was a 4,000 crore offer for sale. Here, 50% of the quota was reserved for QIBs—Qualified Institutional Buyers—which amounts to 2,000 crores. Moving on. There was a 35% retail quota. Nearly 75,000 people got allotments in this. But retail investors usually have a certain mindset. I make IPO videos, so I know that more than half of the retail investors who apply for IPOs...
You know how you get an allotment, right? If the GMP is good, we’ll just sell it. That’s how it works here. So, look, the ₹2000 crore set aside for KYC—think about how much subscription came in. For the KYC quota, there was a 103x subscription. We explained this in the listing day strategy video. Basically, for one allotment, over 100 people are lined up here wanting to invest through NSDL. Got it? All hoping to get shares at ₹800. Before, there wasn’t much liquidity before the IPO. Now liquidity will build up because 35%...
So, you know retailers, right? A lot of retailers here, what do they do? They sell. The retailers sold. QIBs picked it up. This was a 103x subscription. Many people didn’t get it. QIBs quietly invested money. Got it? QIBs quietly put in their money here. Then what happened? Retail investors got FOMO. Okay? And because of that FOMO, the price pumped even more. Now you understand why the price pumped. Got it? So, it’s important for us to understand the reason behind the price pump. Now, I’ll move on to the valuation of NSDL and CDSL, which...
We’ll understand more things as we go. There’s a huge difference in market cap between CDSL and NSDL. It’s like 75% for CDSL and 25% for NSDL. But if you actually talk about demat custody value—how much worth of shares are stored—then you’ll see NSDL holds about 89% market share and CDSL just 11%. There’s a difference in their business models too. I’ll get to the valuation part. We’ve already touched on this before. Look, the investors in CDSL are mostly retail investors. When the market is in a bull run, retail investors are very active.
They’ll come, okay? If the market turns bearish, retail investors usually run away. That’s just how retail investors are. So, the volatility in CDSL is gonna be pretty high. I’ve talked about this before. Now, talking about NSDL, most of the big institutions have accounts there. Most of their shares are stored in NSDL. So even if the market goes down, the SIP inflows keep coming. NSDL works on smaller margins, but when it comes to avoiding volatility, Reliance is the way to go here.
NSDL is way ahead. When the IPO valuation happened, it was at a PE ratio of 47. CDSL was at a PE ratio of 68. Right now, the valuation has hit around ₹1,000 crore above the IPO price, with shares trading around ₹800. You can clearly see that NSDL’s PE ratio has reached 26,000 crore at 68. And if we look at the trailing 12 months, their PE ratio is almost between 75 and 80. So, in terms of valuation, NSDL has even surpassed CDSL.
It's pretty clear now that those who bought NSDL shares in the unlisted market have seen their price go up. Look, NSDL’s price has jumped above ₹1100, and it’s all because of retail buying—people got really excited. At first, people sold the shares, then institutions started buying, and right after that, retail buyers jumped in too. That’s why the stock has pumped a lot. So, somewhere down the line, we can expect to see a drop in valuation, and whenever the stock comes at a better valuation...
So, I’ll try buying here. I’ll also add more quantities of NSDL shares. But right now, buying out of FOMO is pretty useless. Look, ultimately NSDL’s shares will give profits in the future. We just need to work on getting them at the right valuation. Now, if we see a rise in NSDL’s share prices, there are some companies and institutions whose share prices will also go up, and their shares might unlock value. To understand this better, I’ll explain again.
Let me talk about the shareholding pattern. IDBI Bank holds about 14.99% of the shares here. Similarly, NSC, which is the National Stock Exchange, holds around 14%. HDFC Bank has roughly 8% shareholding, and SBI holds close to 4%. Now, look—since IDBI Bank holds a 15% stake here, if we see a rise in NSDL’s share prices, then we can expect a value unlocking in the share prices of IDBI Bank, NSC, HDFC Bank, and SBI as well. Let me explain this with an example. Like—
Eternals, we know that Zomato holds about a 12% stake in Infohha. Around one-third of Infohha’s market cap comes from Eternals’ shares. So, we can see IDBI Bank, HDFC Bank, and SBI listed in the market where we can trade their shares. As for the National Stock Exchange (NSE), their IPO is also coming soon. It’s expected around the end of 2025 or the start of 2026. The IPO has already been cleared—SEBI has approved NSE’s IPO.
Another option is to buy shares of a company in the unlisted market. Like when I talk about NSDL, a lot of people bought their shares at around ₹980. There are also quite a few who bought earlier at a discounted price. Right now, NSDL shares are trading at around ₹1300, so they’re definitely seeing some profit. Similarly, when it comes to NSC, we’re seeing more or less the same situation. Valuation-wise, NSC looks pretty attractive because NSC is an exchange.
Yeah, so both come from the same category. Both businesses fall under the MI category. So, we can expect some growth in NSC as well. With the number of investors increasing in India, when I talk about valuation, it’s pretty much the same case as NSDL. Right now, NSC’s stock is trading at around a 43 price-to-earnings ratio. On the other hand, BS, which is their direct competitor, is trading at over a 60 P/E ratio. So, if you’re interested in investing in NSC’s stock because of this...
The valuation looks pretty strong right now. By the way, I’ve personally bought unlisted market shares through NSDL. I also have NSC in my portfolio. So, you can simply buy unlisted market shares through the StakeUp platform, the same place where I made my purchase. These shares directly reflect in our CDSL demat account. Got it? I’ll drop the link in the description in case you want to buy. Now, coming back to the NSDL conclusion, actually, as of now...
Right now, there’s a lot of FOMO going on in the market, and because of that buying frenzy, we shouldn’t jump in. At the 1300 price level, the valuation is already way too high. If I talk about NSDL’s fair valuation, the shares should be around ₹1000. That’s where we can consider holding long-term. I’m not talking about trading here, nor am I giving any trading tips or recommending buying or selling.
If the share price goes back up to around ₹1,000, I’ll definitely add more quantities myself. Other than that, I’m not giving any buying or selling advice. If you liked the Blog, please give it a thumbs up. If you’re not follow to the Blog yet, do follow, because we’re going to make more IPO Blog in the future. So, follow and hit the button , set it to all notifications. I’ll catch you in the next Blog. Bye-bye, tata. Jai Hind!
Summary
The video presents an in-depth analysis of the NSDL (National Securities Depository Limited) IPO and its post-listing market behavior, alongside a broader perspective on the stock market dynamics surrounding proxy companies like NSDL, CDSL, NSE, and related institutional investors. The IPO was highly anticipated with investors expecting significant gains; however, the grey market premium (GMP) settled at a modest 15%, far below expectations. Despite strong subscription numbers with around 4.7 million applications and nearly 1 million retail allotments, retail investors exhibited typical tendencies to sell early to secure quick profits, leading to volatility in NSDL’s share price. The video explains the roles and shareholding patterns of key institutional players such as IDBI Bank, NSE, HDFC Bank, and SBI, who had to reduce their stakes to comply with SEBI’s regulatory limits under the MII (Market Infrastructure Institutions) category, resulting in a massive Offer for Sale (OFS) worth ₹4000 crores.
The presenter highlights the difference between NSDL and CDSL in terms of market capitalization and custody value, pointing out that NSDL holds a dominant 89% of the demat custody market despite having a smaller market cap. The valuation of NSDL shares is currently high, with a trailing PE ratio between 75-80, and the share price has surged to ₹1300, driven by FOMO among retail investors and aggressive buying by Qualified Institutional Buyers (QIBs). The video cautions against buying at these elevated prices, suggesting waiting for a dip near ₹1000 per share for a better long-term investment opportunity.
Further, the video discusses the potential unlocking of value in shares of related institutions such as IDBI Bank, NSE, HDFC Bank, and SBI, as their shareholdings in NSDL could positively impact their stock prices. NSE’s own IPO, already approved by SEBI, is expected around late 2025 or early 2026. The presenter also advocates buying unlisted shares of NSDL and NSE through platforms like StakeUp, noting that these shares reflect directly in demat accounts.
Finally, the video emphasizes understanding market mechanics, institutional movements, retail psychology, and regulatory frameworks before making investment decisions. The presenter disclaims any trading advice but shares personal investment strategies and encourages viewers to focus on data and valuation rather than hype.
Highlights
- 📈 NSDL IPO had massive subscription but delivered only a 15% grey market premium, lower than investor expectations.
- 🏦 Institutional investors like IDBI Bank, NSE, HDFC Bank, and SBI had to reduce stakes due to SEBI’s MII rules, leading to a ₹4000 crore Offer for Sale.
- 💼 NSDL dominates 89% of India’s demat custody market despite having only 25% market cap compared to CDSL’s 75%.
- 🚀 NSDL’s share price surged to ₹1300 due to retail FOMO and strong QIB buying, but valuation is currently high (PE of 75-80).
- 🔄 Retail investors tend to sell early after listing, creating volatility and short-term price fluctuations.
- 🏛️ NSE’s IPO cleared by SEBI, expected in late 2025 or early 2026, potentially unlocking further value in related stocks.
- 💡 Buying unlisted shares of NSDL and NSE via platforms like StakeUp can be an alternative investment route for savvy investors.
Key Insights
- 📊 Retail Investor Behavior and Market Volatility: The video highlights a common retail investor tendency to sell immediately after IPO listing to book quick profits, which often causes volatility in stock prices. This behavior was evident in NSDL’s IPO, where despite a strong subscription, many retail investors exited early due to fear of loss, which impacted the stock’s price movement post-listing. Understanding this psychology is crucial for investors to avoid panic selling and to plan entry and exit strategies more strategically.
- 🏛️ Impact of SEBI’s MII Regulations on Institutional Holdings: NSDL, NSE, and other market infrastructure institutions fall under SEBI’s MII category, limiting any single institutional investor to hold more than 15% stake. This regulatory cap forced major stakeholders like IDBI Bank and NSE to reduce their holdings through a large Offer for Sale, injecting significant liquidity into the market but also putting downward pressure on prices temporarily. This regulation ensures diversified ownership but also influences the supply-demand dynamics of the shares.
- 💹 Valuation Discrepancy Between NSDL and CDSL: Although CDSL has a larger market capitalization (75% market cap) compared to NSDL’s 25%, NSDL holds a dominant 89% market share in terms of demat custody value. This indicates that NSDL manages a significantly higher volume of high-value assets. The difference in investor base—retail-heavy for CDSL and institutional-heavy for NSDL—also affects volatility, with NSDL’s shares being comparatively less volatile due to stable institutional holdings. This contrast provides investors with insight into the risk profiles and growth potential of both companies.
- 🛑 High Current Valuation and Caution Against FOMO: The NSDL share price’s sharp rise to ₹1300, driven by retail FOMO and institutional buying, has pushed valuation metrics to historically high levels (PE around 75-80). The video advises caution against buying at these inflated prices, recommending waiting for a price correction nearer to ₹1000 for a more reasonable entry point. This reflects a disciplined investment approach focusing on valuation rather than momentum or hype.
- 🔄 Interconnectedness of Institutional Shareholdings and Potential Value Unlocking: The stakes held by IDBI Bank, NSE, HDFC Bank, and SBI in NSDL imply that any strong price movement in NSDL shares could positively impact these institutions’ stock prices through value unlocking. This interconnectedness creates a ripple effect across the financial ecosystem, and investors can monitor these relationships for broader market opportunities. The example of Zomato and Info Edge’s stake influencing each other’s valuations underscores this dynamic.
- 📈 Future Growth Prospects of NSE IPO and Market Infrastructure: The upcoming NSE IPO, with SEBI’s approval already in place, is anticipated to open new avenues for investors in the stock market infrastructure segment. NSE’s listing could create further opportunities for value creation and investment diversification, especially given its significant stakeholding in NSDL and its own robust business fundamentals.
- 💡 Unlisted Market as an Investment Opportunity: For investors seeking alternative routes, purchasing unlisted shares of NSDL and NSE via platforms like StakeUp offers potential benefits, including early access before public listing and possible price appreciation. The video’s mention of these platforms highlights growing digital democratization in the Indian equity market, allowing retail investors to participate more broadly in pre-IPO investments.
Overall, the video provides a comprehensive understanding of NSDL’s IPO journey, valuation dynamics, regulatory environment, retail investor psychology, and future opportunities in India’s market infrastructure space. It advocates a data-driven, patient investment approach rather than succumbing to short-term market euphoria.
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