Astronomical 39,900% return! NSDL IPO becomes multibagger money machine for NSE, SBI, HDFC Bank

The National Securities Depository Limited's (NSDL) upcoming Rs 4,000 crore IPO has transformed into a staggering wealth creation machine for its institutional shareholders, with the State Bank of India (SBI), IDBI Bank, National Stock Exchange (NSE), HDFC Bank and others set to pocket mind-boggling returns of up to 39,900% return on their original investment.

In the IPO, SBI is offloading 40 lakh shares of NSDL acquired at a mere Rs 2 per share. At the upper price band of Rs 800, SBI stands to generate Rs 320 crore in proceeds against an original investment of just Rs 80 lakh, delivering an eye-watering return of 39,900%.

IDBI Bank, selling 2.22 crore shares also bought at Rs 2, is set to realize Rs 1,776 crore against an initial outlay of Rs 4.44 crore, translating to 39,900% return.

Even Union Bank of India, with a smaller holding of 5 lakh shares acquired at Rs 5.20, will pocket Rs 40 crore against an investment of Rs 26 lakh, still delivering returns of over 15,000%.

NSE, which acquired its 24% stake in NSDL at an average cost of just Rs 12.28 per share, is selling 1.8 crore shares to earn a profit of Rs 1,418 crore or 6,415% return.

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The market infrastructure behemoth's IPO, opening for public subscription on July 30 and closing August 1, represents an entire offer for sale (OFS) transaction where existing shareholders are cashing in on years of patient capital deployment.

The OFS, however, isn't driven by profit-taking alone but by regulatory necessity.

"Our Shareholders, IDBI Bank Limited and National Stock Exchange of India Limited currently hold 26.10% and 24.00% of the paid-up Equity Share capital, respectively, of our Company, which is in excess of the maximum permissible limit of 15%. Therefore, IDBI Bank Limited and National Stock Exchange of India Limited are required to mandatorily dilute their respective shareholding in our Company in order to comply with the requirements prescribed under the SEBI D&P Regulations," NSDL stated in its Red Herring Prospectus (RHP).

This regulatory mandate has unleashed a treasure trove of returns across multiple institutional shareholders who backed NSDL during its early days.

HDFC Bank, despite acquiring its 20.1 lakh shares at a higher price of Rs 108.29, will still generate substantial profits of approximately Rs 139 crore from its Rs 217.6 crore investment, representing returns of around 638%.

State-owned Specified Undertaking of the Unit Trust of India (SUUTI) joins the bonanza, selling 34.15 lakh shares bought at Rs 2, set to realize Rs 273.2 crore against an original investment of Rs 68.3 lakh.

Also Read | NSDL IPO shocker: Price band 22% below unlisted market value

NSDL IPO GMP

The grey market is already signaling robust investor appetite, with NSDL shares trading at a healthy GMP of Rs 145-155, implying listing gains of about 18% over the IPO's top end. While grey market premiums remain speculative and unregulated, they often reflect underlying demand dynamics.

At Rs 800, the IPO values NSDL at a price-to-earnings ratio of 46.6, notably lower than its listed peer Central Depository Services Limited (CDSL), which trades at a P/E of 66.6. This valuation gap suggests potential room for further appreciation post-listing.

The company's fundamentals remain robust despite recent primary market headwinds. In Q3 FY25, NSDL posted a 29.8% year-on-year rise in consolidated net profit to Rs 85.8 crore, while total income increased 16.2% to Rs 391.2 crore.

NSE will retain approximately 15% equity stake after the offering, ensuring continued strategic involvement while complying with regulatory requirements. The allotment of NSDL shares is expected on August 4, with listing likely on August 6.

Anchor investors can participate a day earlier on July 29, providing institutional investors first access to what promises to be one of the year's most sought-after IPOs.