India's IPO Surge: Depositories Set for Earnings Boom

In Q2 FY27, India's depositories CDSL and NSDL are anticipated to see a considerable earnings uplift driven by robust primary market activity, even as subdued secondary market performance may temper transaction revenues. Brokerages forecast that income from Initial Public Offerings (IPOs), ongoing issuer services, and the addition of new demat accounts will bolster the depositories' financial results during the September quarter.

Analysts project a sequential decline in secondary market trading volumes for Q2 FY27. However, this is expected to be counterbalanced by a significant resurgence in primary market engagement, with substantial capital expected to be raised. Demat account additions are also predicted to strengthen, indicating increased investor participation.

CDSL is expected to benefit more significantly from the IPO wave due to its larger share of retail investors, while NSDL may experience a more gradual positive impact. Although depositories do not earn fees directly on IPO amounts, their revenue is closely tied to allotment records and corporate actions. This means that retail-heavy IPOs and subsequent corporate events are key revenue drivers.

For CDSL, IPO and corporate-action income could see a sharp increase from Q1 FY27 levels, supported by a busy IPO calendar and the annual general meeting season. NSDL, less reliant on IPOs, is expected to gain from growth in its demat account share and increased e-voting income during the AGM season. Investor focus remains on the sustainability of revenue growth, with recurring issuer and transaction revenues ultimately proving more critical than a single strong IPO-led quarter.