Over the last week, I’ve been asked this question multiple times:

“Now that NSDL’s IPO is live, should we expect a sharp correction in CDSL stock?”

Let’s unpack this.

🔍 The Pre-IPO Buzz

Before the NSDL IPO price band was announced, the stock was being quoted in the unlisted market at ₹1,025–1,050. This implied a price-to-earnings (PE) ratio of ~60x, which wasn’t far off from CDSL’s ~67x PE at that time.

The implied message was: the market expected NSDL to list at a similar valuation, perhaps even pushing investors to reassess CDSL’s own valuation.

📉 The Surprise Price Band

Then came the official price band announcement on July 25 – ₹760–800.

This surprised many, in fact disappointing especially those who had bought NSDL shares in the unlisted space at much higher prices.

At the upper end of ₹800, the IPO implied a PE of just ~47x, significantly below both market expectations and CDSL’s trading multiple.

What followed?

CDSL’s stock price slipped from ₹1,679 to ₹1,512 in just 4 trading sessions – a nearly 10% drop.

📊 Let’s Look at the Data

Despite the fall in price, trading volumes on those days were around average. This suggests we didn’t see panic selling. Rather, it was more of a repricing or adjustment. Even now, CDSL is trading at a PE of ~64x, still well above NSDL’s IPO multiple of ~47x.

Why the premium?

Let’s look at few of the ratios:

ROE: NSDL 17.1%, while CDSL 32.7%
FY25 Revenue Growth (YoY): NSDL 12.3%, while CDSL 33%
FY25 Net Profit Growth (YoY) NSDL 26.7%, while CDSL 25.2% – more or less similar

Clearly, CDSL’s ROE and topline growth are far superior, which may justify a higher valuation multiple in the market’s eyes.

🧠 So, What Happens Next?

While the IPO may have triggered a short-term repricing of CDSL, I don’t believe there’s much more downside from here, unless there’s a major shift in market sentiment or NSDL lists at a steep discount to its offer price.

In the medium to long term, market will value these two companies based on how they perform, not how they were priced in the IPO.

Some investors might consider diversifying into both, especially those who believe NSDL may eventually close the valuation gap. But given NSDL’s relatively lower ROE and growth metrics, a mass exodus from CDSL to NSDL seems unlikely.

🤔 Will NSDL Ever Trade at ₹1,025 Again?

Maybe. But history says, don’t count on it too soon.

Just look at Paytm, or even HDB Financial Services in the unlisted space. The euphoria rarely sustains post listing if fundamentals don’t support the price.

So expecting NSDL to quickly reclaim its unlisted price may be wishful thinking.

Verdict

CDSL may have taken a short-term hit from NSDL’s IPO announcement. But it may also be because of other factors, and not NSDL.

But long term? It’s business fundamentals that will matter more than peer listings. Unless NSDL surprises the street with strong quarterly performance post-listing, I see this becoming a non-event for CDSL, sooner rather than later.