Synopsis : Both NSDL and CDSL have corrected this year, but experts believe the long-term opportunity remains tied to India's expanding capital markets. While NSDL now trades at a lower valuation, market experts continue to prefer CDSL due to stronger earnings quality, faster demat account growth and superior profitability.
India's depository business remains one of the strongest structural themes linked to the country's growing equity culture.
With millions of new investors entering the stock market over the last few years, both National Securities Depository (NSDL) and Central Depository Services (India) (CDSL) have benefited from rising demat account additions.
However, after recent corrections in both stocks, investors are asking a key question: Does NSDL's lower valuation make it the better opportunity, or does CDSL still deserve its premium?
Here's what market experts believe.
Why NSDL's correction has attracted attention
NSDL has corrected more sharply than CDSL during 2026, resulting in a noticeable reduction in its valuation multiple.
This has prompted investors to reassess whether the stock now offers better value compared with its listed peer.
However, experts believe valuation alone may not tell the full story.
Why CDSL continues to command a premium
According to Nevil Dedhia, Managing Director and Head of Institutional Equities at Equirus Securities, CDSL continues to enjoy a structural advantage because of its stronger relationship with discount brokers.
Discount brokers have been the biggest contributors to new demat account additions in recent years, helping CDSL maintain faster customer growth than NSDL.
While NSDL could witness periods of improved market share during slower market conditions, CDSL's long-term growth remains better aligned with India's expanding retail investor base.
Demat account growth remains the biggest driver
Both depositories generate a significant portion of their revenue from active demat accounts.
As the number of accounts increases, businesses benefit through:
- Annual issuer charges
- Transaction charges
- IPO-related income
- Corporate action processing
Since CDSL has consistently added more retail accounts, experts believe its medium-term revenue growth could remain stronger than NSDL's unless NSDL significantly improves its presence among discount brokers.
Earnings quality gives CDSL another edge
Geetanjali Kedia, Chief Analyst at SPTulsian Investment Advisers, also prefers CDSL over NSDL.
According to her, although both companies operate in a duopolistic industry with attractive long-term growth prospects, CDSL generates a larger share of its profits from its core depository business.
She believes this results in:
- Better earnings quality
- Higher profitability
- More sustainable long-term growth
While pricing pressure in the KRA (Know Your Customer Registration Agency) business affected earnings recently, the core depository business continues to remain healthy.
IPO boom remains another tailwind
Experts also point out that healthy IPO activity directly benefits depositories.
Every new IPO leads to additional account activity, transaction income and corporate action revenue.
As India's capital markets continue expanding, both companies are expected to benefit from higher retail participation and increasing financialization of savings.
How the two stocks compare
CDSL
- Market Cap: ₹28,180 crore
- PE Ratio: 61.8x
- 2026 Performance: Down around 7%
- One-year Performance: Down around 23%
NSDL
- Market Cap: ₹16,690 crore
- PE Ratio: 43.96x
- 2026 Performance: Down around 21%
Although NSDL trades at a lower valuation, experts believe CDSL's superior earnings profile and faster business growth continue to justify its premium multiple.
What investors should watch
India's depository industry remains a near-duopoly, making both companies important beneficiaries of long-term capital market growth.
However, future performance will largely depend on:
- Growth in new demat accounts
- Retail participation in equity markets
- IPO activity
- Regulatory developments
- Evolution of the KRA business model
For now, market experts continue to favour CDSL over NSDL, citing stronger fundamentals and better long-term earnings visibility despite its relatively higher valuation.
Disclaimer : This article is for informational and educational purposes only and should not be construed as investment advice or a recommendation to buy, sell or hold any security. Opinions and views referenced are based on statements made by market experts and publicly available information. Stock market investments are subject to market risks, and investors should conduct their own research or consult a SEBI-registered investment advisor before making any investment decisions.
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