NSDL Q2 FY27 Earnings Call: Revenue Jumps 36.5% But PAT Lags, Sees Expense Growth Flattening FY28

Strong Top Line, Softer Margin & PAT Growth

• Consolidated revenue from operations of Rs.545.9 Cr — up 36.5% YoY and 5.7% QoQ vs Rs.400 Cr in Q2 FY 2025-2026; consolidated total income at Rs.582.6 Cr (+34.8% YoY, +3.9% QoQ).
• Consolidated EBITDA of Rs.178.5 Cr — up 12.5% YoY vs Rs.158.8 Cr, with EBITDA margin at 30.6%; consolidated PAT at Rs.122.2 Cr (+10.9% YoY, +20.6% QoQ), PAT margin at 21%.
• Standalone revenue of Rs.227.8 Cr — up 11.6% YoY and 25.1% QoQ (19% QoQ ex-dividend); standalone total income at Rs.279.8 Cr (+11.7% YoY, +27.4% QoQ).
• Standalone net profit of Rs.126.7 Cr — up 5.2% YoY and 42.1% QoQ (21.6% QoQ ex-dividend); standalone EBITDA margin at 63% (58.6% ex-dividend); standalone net worth at Rs.2,263.4 Cr.
• H1 FY 2026-2027 consolidated total income of Rs.1,143.1 Cr — up 46.7% YoY; consolidated net profit up 10.4% YoY to Rs.220.8 Cr; standalone H1 total income up 13.3% YoY to Rs.499.5 Cr with net profit up 6.3% YoY.
• Technology capitalization of Rs.23.9 Cr in H1 FY 2026-2027 — vs Rs.106.1 Cr for full FY 2025-2026; NSDL standalone profit contributes ~88% of consolidated profit.
• PAT growth (+10.9% YoY) lagged revenue growth (+34.8% YoY) — management attributed this to an elevated cost cycle in FY 2026-2027 from technology and specialized-skills investments.

Robust Industry Flows, Retail Share Still the Priority

• India's primary market raised over Rs.1.17 lakh crore via 244 IPOs — in the first nine months of CY 2026, with nearly Rs.90,000 Cr raised in Q2 FY 2026-2027 alone, including the landmark listing of National Stock Exchange (industry-wide context).
• Industry-wide demat accounts crossed 24 crore — with ~90 lakh additions in Q2 FY 2026-2027 vs 79 lakh in Q2 FY 2025-2026 (+14.2% YoY).
• NSDL's unique investor base reached ~13.7 crore — by end-September 2026, up from 12.9 crore in April 2026; total demat accounts at 4.72 crore with 15.6 lakh net additions in Q2 FY 2026-2027.
• Demat market share at 17.2% in Q2 FY 2026-2027 — vs 17.6% in Q1 FY 2026-2027; H1 FY 2026-2027 share at 7.4% vs 16.6% in H1 FY 2025-2026 (as stated in the call).
• Fintech brokers now 23.5% of incremental demat sourcing — vs 9.3% in Q2 FY 2025-2026; the youth plan and women's demat plan together contributed ~45% of incremental additions in Q2 FY 2026-2027.
• 86% of value of custody (~USD 5.6 trillion) — of which 80% represents the equity base; 320 DPs on board (4 added in Q2, 10 in H1 FY 2026-2027) serving 2,000+ cities and small towns.
• Issuer services: investor base crossed 1,18,000 issuers — unlisted issuer segment market share ~72.5% in Q2 FY 2026-2027 with 3,197 companies admitted; e-voting events rose to 3,160 from 2,924 YoY, share broadly stable at ~52.4%.

Tokenization Pilot Underway; No First-Mover Edge

• DMAT 2.0 pilot-launched under SEBI's sandbox — a SEBI-driven initiative using blockchain/DLT for tokenized securities, currently restricted to bonds; launched jointly by NSDL and CDSL, so management said there is no first-mover advantage ("we moved together").
• 3 bond issuances completed on the platform — as of Q2 FY 2026-2027, totaling a little over Rs.1,000 Cr in primary issuance; tokenized bonds enable instantaneous settlement vs T+1/T+2/T+3 for conventional bonds.
• Settlement occurs via CBDC — requiring investors to open a wallet with designated RBI bankers; no additional KYC needed; access is currently institutional-only, with SEBI to evaluate next steps (retail access, secondary market) based on experience feedback; secondary market development remains work-in-process, with SEBI expecting completion (timeline unspecified).
• 68+ APIs introduced for DPs — plus an API-based interface with National Stock Exchange to automate electronic gold receipts (EGRs) and API connectivity for online bond platform providers (OBPPs) for real-time validations; online Form 121 submission enabled (announced by the Honorable Finance Minister in the budget).
• Management framed tokenization as a potential new market avenue — other tokenized financial instruments could emerge in future, but explicitly subject to regulatory developments and evolution.
• Senior leadership additions announced — Subhash Kelkar (ED–Critical Operations, ~36 years, ex-CTO at Bombay Stock Exchange), Ankit Sharma (ED–Regulatory and Compliance, 31 years, ex-CRO at National Stock Exchange), and Ashish Pandekar as CTO (~35 years, ex-NSE and Power Exchange India).

Negative Operating Leverage Flagged; Relief Expected from FY 2027-2028

• Analyst Rakesh Kumar (Valentis Advisors) flagged negative operating leverage — total income growing ~13% while employee, technology and depreciation expenses are growing at more than 2x that rate in Q2 FY 2026-2027.
• MD & CEO Vijay Chandok declined formal guidance — ("we really refrain from giving any guidance") but noted opex/capex scaled from ~Rs.30 Cr to more than Rs.100 Cr over the elevated-spend phase of the last ~1.5–2 years (through FY 2026-2027), with the run-rate flattened at that level since.
• Chandok said he "would expect" expense growth to start flattening from FY 2027-2028 — meaning the kind of increases seen in FY 2026-2027 should not recur; he cautioned the trajectory is dependent on market conditions and it is "very difficult to commit a certain time frame."
• He did not confirm negative operating leverage ends from FY 2027-2028 — expenses must first show normalization, and only then does operating leverage kick in.
• FY 2026-2027 spend is fully budgeted, planned and underway — most of it "must do"; beyond FY 2026-2027, spend can include "good to do" items, with management's stated endeavor to move toward "very discriminate spending."
• Tech spend guided broadly flattish in FY 2026-2027 vs FY 2025-2026 — (marginal difference possible); for FY 2027-2028, spend is expected to be broadly similar to FY 2025-2026, in build-up rather than catch-up mode, with a fine-tuned action plan to be rolled out over the next few months.
• Pricing overhang persists — no price increase on IPO verification charges as of Q2 FY 2026-2027; settlement/issuer charge pricing discussions with the regulator have been ongoing for more than one year and remain unaddressed with no outcomes to report.

Subsidiary Contribution Crosses 10% of Profits

• Subsidiaries' contribution to profits rose from ~1.5% to more than 10% — from about 1.5% a year–1.5 years back (≈ FY 2025-2026) to more than 10% as of Q2 FY 2026-2027; both subsidiaries are profitable.
• Payments Bank retail customer base grew 1.6x YoY to 54.3 lakh — in Q2 FY 2026-2027 (vs 33.5 lakh a year ago); deposit balances grew 1.4x to Rs.378.1 Cr; segment results grew from Rs.1.8 Cr to close to Rs.5 Cr+ (period unspecified).
• RuPay NCMC smart cards reached 1.3 crore MSRTC registrations — with over Rs.100 Cr in cumulative card loads in October 2026, supporting concessional bus travel in Maharashtra under the government mandate effective September 4, 2026; management flagged this as an important milestone supporting the payments bank's float.
• UPI acquiring business, started ~18 months ago, has seen an uptick — via partnerships with payment gateway providers and the broader payments ecosystem to settle UPI transactions through the payments bank; specific UPI numbers not disclosed.
• MDR on UPI is currently on pause — as and when it is re-declared, management will assess how it works for the Payments Bank and the overall ecosystem; impact not quantified as of now.
• NDML incorporated NDML Insurance Repository Services Limited — following the IRDAI guideline, and filed a demerger application with NCLT Mumbai to transfer the insurance repository business; cumulative dematerialized insurance policies on the platform stand at 1.75 crore; KRA records grew to 2.06 crore as of September 30, 2026.

IPO Pipeline as Alpha; No FY 2027-2028 Share Guidance

• IPO/corporate actions business grew ~24% YoY in Q2 FY 2026-2027 — management noted a strong IPO pipeline "adds alpha" to the existing business; IPOs have historically added ~25-30% of business whenever there is an additional pipeline (period unspecified).
• Management expects the Q2 FY 2026-2027 IPO pace to continue — (period unspecified), conditional on market momentum persisting and SEBI continuing to approve issues (list on its website); one large IPO was seen in October 2026 (Q3 FY 2026-2027).
• Retail demat market share is the CEO's "priority number one" — run-rate retail share climbed from 9% → 12% → 14% and currently varies around 16-18% (as of Q2 FY 2026-2027); ~30 new DPs added over the trailing ~18 months, many of them fintechs; the top three DPs control virtually 60-65% of the market (industry structure context).
• Management expects market share to rise as newly acquired DPs scale up — but explicitly declined to give specific guidance for FY 2027-2028; attracting new DPs, difficult ~18-20 months ago, is described as a journey now behind the company.
• Unlisted company sourcing stabilized at ~3,000 — over the last two quarters (Q1-Q2 FY 2026-2027) after dipping post the NCA definition change; ~30,000 companies onboarded in FY 2025-2026 vs 33,000 in FY 2024-2025 and ~6,500 in H1 FY 2026-2027 — management characterized the onboarding cycle as saturated.
• Listed issuer folios broadly flattish at ~14 crores — as of Q2 FY 2026-2027, unchanged from the level highlighted in Q1 FY 2026-2027; folio activity reflects with a lag, with a refresh expected around March 2027 (Q4 FY 2026-2027) or on an annual cycle.
• NSDL remains in a technology building phase — investing in technology resilience, cybersecurity, operational automation, AI and critical talent; the pace of critical-talent investment has started moderating, and management expects operating leverage to support margin normalization as these investments mature (period unspecified).