NSDL FY26: Higher Recurring Revenue, Record DP Onboarding, and a Tech Upgrade Cycle in Full Swing

National Securities Depository Limited closed FY26 with steady standalone profitability even as market activity weakened into Q4. On a standalone basis, FY26 total income rose to 835.1 crore, up 14.2 percent year-on-year, while profit after tax increased to 360.6 crore, up 12.1 percent. The quarter itself was more muted. Q4 FY26 standalone total income was 195.4 crore and PAT was 79.7 crore, reflecting subdued capital market activity.

Management repeatedly anchored its commentary in the market context. The second half of the year saw heightened volatility, with geopolitical shocks and risk-off flows. The company noted a sharp March 2026 FPI outflow of USD 12.7 billion and an 11.3 percent decline in the Nifty into year-end. At the same time, domestic flows stayed resilient. March SIP inflows were stated at 32,000 crore, up from 25,900 crore in March 2025. That combination matters for NSDL because some parts of its revenue move with transaction activity, while others grow with the underlying base of demat holdings and issuers.

A business shifting toward recurring income

The clearest financial theme in FY26 was a shift toward recurring fees. In the standalone operating revenue mix, annual custody fees formed 50.4 percent of operating income in FY26 versus 42.2 percent in FY25. Annual custody fee income rose to 355.5 crore in FY26 from 261.2 crore in FY25, and in Q4 FY26 it was 97.6 crore.

This rising share of custody fees helped balance the inherent seasonality and cyclicality in corporate actions and IPO-linked streams. The CA and IPO line declined to 87.0 crore in FY26 from 106.8 crore in FY25, and in Q4 FY26 it fell to 16.2 crore from 33.7 crore a year earlier. In the concall, management linked Q4 weakness in CA and IPO income to lower event counts and the absence of a few large corporate action events seen in the prior year.

Pledge fee income remained steady. FY26 pledge fee was 56.0 crore versus 52.3 crore in FY25. Management clarified that the pledge revenue model is driven by transaction count, not the value of margin trade funding books, which can grow without an equal increase in pledge transaction volumes.

Financial snapshot

Operating momentum: accounts, DPs, and market share gains

Operationally, NSDL highlighted scale and share in core depository services. As of March 2026, it reported 44.4 million beneficiary owner accounts and custody value of 477.3 lakh crore, with an 86.1 percent market share by custody value. The company also cited very high market share by value in listed debt securities at 97.7 percent.

FY26 demat account acquisition was an important marker because the overall industry saw slower additions. NSDL added 59.3 lakh gross demat accounts and 49.4 lakh net demat accounts in FY26. The presentation showed industry net additions declining 21.9 percent, while NSDL net additions grew 34.1 percent year-on-year. On incremental market share, NSDL reported 15.4 percent in FY26 versus 9.0 percent in FY25.

DP onboarding was another focus area. NSDL ended March 2026 with 311 DPs, having added 21 DPs during FY26, described as a record for the company. Management said the addition was skewed to fintech and new-age brokers, and it expects further contribution from DPs that were onboarded late in Q4 and are still scaling.

The CEO addressed why net market share can fluctuate quarter to quarter, noting that large IPOs can disproportionately benefit competition and that bank-based DPs tend to close dormant accounts near year-end, temporarily impacting net additions.

Technology investments: near-term cost, long-term operating leverage

A major part of the FY26 narrative was the company’s technology investment cycle. NSDL stated it has expanded API-led interoperability and operational integration, including implementation of 15 plus APIs in Q4 FY26 and more than 30 APIs in FY26. In the concall, management said more than 40 APIs have been launched, and positioned this as a key driver in reversing earlier negative market perception among brokers.

This technology push is visible in costs and capitalisation. The CFO stated that NSDL capitalised 106.1 crore during FY26 and that technology spend rose to 91.4 crore. In response to investor questions, management described the tech upgrade program as roughly a 2 to 3 year journey. It said FY27 technology capex and opex should be broadly similar to FY26, and then capex is expected to decline after completion.

The company also linked some spend to regulatory and security requirements. In the Q and A, management referenced a SEBI circular requiring a clean air gap between the disaster recovery and data centre environments and additional security layers, which contributed to increased licences and cybersecurity-related assets.

On people costs, management indicated FY26 was the peak year for manpower additions, and FY27 additions will be much lower with a focus on productivity and automation benefits.

Subsidiaries: contribution improving, but regulation remains a swing factor

On a consolidated basis, FY26 total income was 1,660.2 crore and PAT was 380.0 crore. Management stated NSDL standalone profit as a share of consolidated profit reduced from about 95 percent last year to about 90 percent in FY26, indicating a higher subsidiary contribution.

Two subsidiaries featured prominently.

NSDL Payments Bank reported 4.4 million customers and deposit balances of 521 crore as of Q4 FY26. The presentation placed it among top banks in AePS and micro-ATM transaction value and among the top 33 banks in UPI digital transactions. Management also noted that in July 2025 RBI included NPBL in the Second Schedule of the RBI Act, making it a scheduled payments bank. It also noted a 4.95 percent stake dilution to Protean eGov Technologies for 30.2 crore.

NSDL Database Management Limited operates multiple platforms including the insurance repository, KRA, RTA, SEZ Online, and others. NDML cited 19.8 million KYC records and about 15.4 million insurance policies dematerialised with a 36 percent market share in insurance policy digitisation. In the concall, management highlighted an announced demerger of the insurance repository business into a new company in line with IRDAI directions.

Management remained cautious in projecting subsidiary outcomes because both payments banking and parts of NDML have seen regulatory interventions affecting business models and pricing.

Takeaways from FY26

NSDL’s FY26 results show a market infrastructure business benefiting from scale, with a clear shift toward recurring income through annual custody fees. Account additions and DP onboarding were notable in a year when industry additions slowed, suggesting improving competitiveness, especially with fintech DPs.

The near-term watch items are also clear. Costs and capex are elevated during a technology and cybersecurity upgrade cycle that management expects to stay at similar intensity in FY27. At the same time, the company is trying to convert those investments into operating leverage and better broker experience.

If FY26 was about momentum and rebuilding market perception through technology, FY27 is positioned as the second peak year of the upgrade program. The next phase will be judged by whether this investment translates into sustained market share gains in incremental accounts, a higher share of recurring revenue, and stable margins through different market cycles.