The KRA Agencies of Central Depository Services Ltd. (CDSL) and National Services Depository Ltd. (NSDL) have revised their KRA charges, with the Fetch Rate cut by 20% to ₹28 from ₹35 earlier. According to reports from CNBC TV18, this rate applies when new intermediaries like brokers or mutual funds fetch client's existing KYC data from existing registries and pay validation fees to the depositories. The revision also includes rationalization of charges for creation of KYC, modification of KYC and status enquiry. As per HomeStocksNews, this operational adjustment, alongside rationalized charges for KYC creation and modification, is anticipated to trim Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) by an estimated 5% to 6% for both entities.
Brokerages are estimating an impact of 5% to 6% to the EBITDA of these companies due to the rationalization of these charges. For companies like CDSL, the CVL KRA constitutes nearly 20% of the overall topline, making this adjustment a material event. The new charges will take effect from April 1, providing companies with a transition period to adjust their revenue projections. As reported by HomeStocksNews, this profit recalibration comes as both depositories' respective KYC Registration Agencies (KRAs) implement a revised fee structure, with the operational adjustment signaling a near-term challenge to profitability metrics.
CDSL shares are down 1.4% on Friday at ₹1,277.1, according to CNBC TV18 reports. The stock is down 30% from its recent 52-week high of ₹1,828. Meanwhile, NSDL shares are currently trading little changed at ₹919, though the stock is down 35% from its post-listing high of ₹1,425 and is back towards its IPO price of ₹800. This price action suggests the market may have already been discounting broader pressures on the sector, with both depositories commanding substantial market capitalizations - CDSL at approximately ₹26,769 Cr and NSDL around ₹18,391 Cr. Their Price-to-Earnings (P/E) ratios remain elevated, with CDSL's P/E around 56.2x and NSDL's at approximately 53.60x, trading above the industry average P/E of 43.86x.
Historically, CDSL has focused on retail investors, capturing approximately 76% of the market share in demat accounts by 2024, servicing over 15.3 crore accounts. This retail dominance, often facilitated by partnerships with discount brokers, drives its transaction and KYC-related revenues. Conversely, NSDL caters primarily to institutional clients and government bodies, managing a substantially larger custody value of around ₹464 trillion, compared to CDSL's ₹70.5 trillion, and holding an 86.81% share in custody value. While CDSL has demonstrated superior profitability per rupee spent, earning ₹2.6 for every ₹1 compared to NSDL's ₹1.4, NSDL's larger operational scale and institutional focus present a different risk-reward profile.
The broader financial services sector is navigating a complex environment, with market sentiment mixed as of mid-February 2026. Earlier in February, regulatory tightening by the Reserve Bank of India on capital market exposure norms for banks and depositories had put financial services stocks under pressure. The current share price trajectory for both CDSL and NSDL suggests that the market's concerns extend beyond the immediate impact of KYC fee rationalization. Analysts continue to project growth for the depository sector, driven by ongoing dematerialization initiatives, increasing retail participation in capital markets, and the mandatory dematerialization of unlisted companies and insurance policies. However, the elevated P/E ratios of both companies present valuation risks, with CDSL's premium valuation already pricing in significant future growth which could be threatened by sustained margin pressure.