CDSL vs NSDL: Detailed Comparison of Business, Growth, Accounts and Future Potential

CDSL and NSDL are two of India’s most important companies that play a vital role in making the entire market system convenient, as they are the only two main depositories in India. The role of a depository is simple: whenever you want to buy or sell shares, you need to open two different types of accounts — a trading account and a demat account.

Through a trading account, you can buy and sell shares, and if you take any position in intraday or in futures and options, that is managed under the trading account. However, whenever you purchase shares that you want to hold — whether as a long-term investment or a short-term investment — those shares are stored in the depository. In India, there are only two depositories: NSDL and CDSL.

So, whenever you open an account with a broker like Zerodha, Angel One, Groww, SBFC Securities, SBI Securities, or any other, they are linked with one of these two depositories — either CDSL or NSDL.

CDSL vs NSDL – Who Has the Stronger Business and Future?

Business Growth

If any Foreign Institutional Investor (FII) opens an account in India, there is a high probability that it will be linked with NSDL. This gives NSDL a higher AUM (Assets Under Management) of nearly ₹5 trillion and greater transaction volumes, making it an important player in this segment.

On the other hand, the core business of CDSL primarily comes from retail investors. These retail accounts are the key drivers of growth. The future growth of both companies largely depends on the type of accounts being opened in India. If more FII accounts are created, NSDL will benefit significantly. However, if retail accounts continue to grow at a faster pace, it will have a strong positive impact on CDSL’s business.

At present, both companies are witnessing notable growth. CDSL has around 15 crore accounts, while NSDL has about 5 crore accounts. Currently, CDSL holds nearly 86% of the market share in terms of total demat accounts opened. This suggests that CDSL’s business growth rate is likely to remain stronger than NSDL’s, as the retail segment in India is expected to expand more rapidly than the FII segment.

Financial Analysis

CDSL reported revenue of ₹326 crore in FY20, which is projected to rise to ₹1,420 crore in FY25, reflecting growth of nearly 335%. In comparison, NSDL’s revenue increased from ₹282 crore in FY20 to an expected ₹1,082 crore in FY25, showing growth of around 283%.

On the profitability side, CDSL’s net profit grew from ₹107 crore in FY20 to ₹507 crore in FY25, marking a strong 374% rise. In contrast, NSDL’s profit expanded from ₹125 crore in FY20 to ₹343 crore in FY25, representing 174% growth. This clearly highlights that although both depositories have delivered solid revenue growth, CDSL enjoys a much higher operating profit margin (OPM of ~55% compared to NSDL’s ~26%), which has translated into significantly stronger profit growth.

Since retail participation in India is expanding rapidly, this directly benefits CDSL more significantly. Looking at data from the past few years, the margins of both companies have improved, mainly because their IT infrastructure is already established. As revenues rise, fixed IT costs do not increase substantially, which boosts margins and results in higher profitability.

From a valuation perspective, both companies trade at a relatively high P/E ratio (above 65). This is justified by their duopoly business model and strong growth prospects, which support premium valuations. At present, NSDL is considered to have a slightly higher valuation compared to CDSL. These elevated multiples are also linked to the nature of their businesses, as most of their assets are digital and intangible rather than physical.

As of August, CDSL has a market capitalization of around ₹33,000 crore, while NSDL’s market cap stands at over ₹24,000 crore, making CDSL the larger company in terms of market value.

However, there is another perspective to consider. In terms of custody of securities (assets held), NSDL leads with a market share of around 73%. Additionally, when it comes to opening accounts for FIIs (Foreign Institutional Investors), HUFs (Hindu Undivided Families), and institutional investors, the majority prefer NSDL. As a result, NSDL continues to maintain a higher Assets Under Management (AUM) compared to CDSL.

Future of CDSL and NSDL Business

From an industry perspective, these two companies are highly significant, and their future growth looks very promising as India’s financial markets continue to expand and more people become financially literate and aware of investments. The mutual fund industry also plays a crucial role in creating additional business opportunities for these companies.

The business potential here is immense. Out of India’s total population of around 150 crore, only about 20 crore demat accounts have been opened so far. This highlights that a large portion of the market is still untapped, leaving significant scope for growth. As more people participate in the financial markets in the coming years, the businesses of these two depositories are expected to become even stronger and more efficient.

Both companies also have extensive experience, with over 25 years in the industry. They are not new or untested ventures; instead, they are well-established institutions that have already built a robust IT infrastructure and continue to innovate in their business models.

However, when it comes to investments and analyzing future possibilities—particularly regarding which company might generate more business—it is necessary to look deeper into their individual performance and strategies.

Broker Role in Depository

When investors open an account, the choice of broker plays an important role. The services and facilities provided by the broker determine which depository the account will be linked to. According to CDSL’s annual report, many major brokers are associated with the company.

Prominent brokers such as Groww, Angel One, HDFC Securities, SBI Securities, Upstox, and Zerodha are linked with the CDSL depository. This is one of the main reasons why CDSL’s retail segment has been showing consistent growth compared to NSDL.

BSE and NSE Backing

NSDL is backed by the NSE, which holds nearly a 15% stake. Several banks are also key shareholders: IDBI Bank holds around 15%, HDFC Bank holds 6.95%, State Bank of India holds about 3%, and Union Bank of India has a 2.46% stake in NSDL.

On the other hand, CDSL is backed by the BSE, which holds a 15% stake in the company. Standard Chartered Bank owns nearly 13% of CDSL. A few mutual funds are also among the shareholders — for example, LIC MF Flexi Cap Fund (formerly LIC IAS Non-Par Open) holds about 4.40%, and NSE Clearing Limited owns around 1.11%.

Listing Structure

In terms of listing, CDSL — though backed by the BSE — is listed only on the NSE. Similarly, NSDL — which is backed by the NSE — is listed only on the BSE. This arrangement ensures that a depository backed by one exchange is not listed on the same exchange, maintaining a balanced structure in the market.