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All About Unlisted Equity Shares
  • What Are Unlisted Shares
  • Is It Safe To Buy Them
  • Calculation Of Fair Value
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What Are Unlisted Equity Shares?

In today’s world, everyone is concerned about their earnings, how to save more, and where to invest their money so that it multiplies. There are various options available where one can invest their money such as mutual funds, fixed deposits, real estate, gold bonds etc. One such investment instrument is stocks. There are two types of stocks Listed and Unlisted.

Are Unlisted Shares Liquid?

Yes, unlisted shares are liquid but as compared to listed shares the liquidity is lower as they are not listed on the stock exchange in India. The liquidity of a share is described as the frequency at which a share can be traded. Since not everyone knows about the unlisted market, the number of investors trading in these shares is comparatively low making it less liquid.

What Are Listed And Unlisted Securities?

Listed securities are those securities that are listed on the stock exchange and are regulated by the Securities and Exchange Board of India. These include shares and debentures.

Unlisted securities such as debentures and shares on the other hand are securities that are not listed on any formal exchange in India and are not regulated by SEBI.

What Are Unlisted Equity Shares?

Unlisted equity shares are shares of companies that are not listed on the stock exchange in India. These companies are majorly start-ups or in their growing stages. In order to get listed, these companies need to comply with specific guidelines and eligibility requirements such as market capitalisation, company size, listing fee, etc. set by the Securities Exchange Board of India.

  • Pre-IPO shares - These are shares of companies waiting for their Initial Public Offering (IPO) and would get listed on the stock exchange in the near future.
  • ESOP Shares - Employee Stock Option Plan, is an option given to an employee to buy a certain amount of shares in the company in which they are working. These shares are issued to tenured employees in a company as a form of motivation.
  • Delisted Shares - These are shares of companies that were listed on the stock exchange of India, but are now removed from it due to specific reasons. Delisted shares can no longer be traded on the stock exchange.

Is It Safe To Buy Unlisted Shares?

Unlisted shares are slightly riskier than listed shares. Listed shares are on the stock exchange and are monitored by SEBI whereas unlisted equity shares are not regulated by anyone. Unlisted equity shares offer their investors proliferating profit, which is why people want to invest in these shares. It is best for investors who like taking risks and are into long-term investments.

How Is The Fair Value Of Unlisted Shares Calculated?

Unlisted shares are traded on the over-the-counter market, it is not a proper physical market or location. The trade of stocks and securities takes place electronically without the interference of the stock exchange.

Unlisted shares do not have an actual price set on them like in listed shares. There are various ways by which the prices of these shares can be evaluated as there is no particular method that would be apt for the valuation of all the shares. Following are a few methods by which the prices of unlisted shares are evaluated:

  • Book Value Method The company's tangible assets and liabilities are taken into account. It is essential to check that the company's assets and liabilities are revalued annually and are fair. Book Value=Sum of all tangible assets - Sum of all tangible liabilities.
  • Last Transaction Price Method In this method, the last price at which the unlisted share was traded is considered. Generally, this method is not used that much.
  • It is one of the most used methods but only applies to companies with stable business operations as recent earnings are accounted for to anticipate future cash flow. Once that is predicted, you have to discount these future cash flows with a discount rate. This rate can be derived from the same sector, under the listed companies on the stock exchange.
  • Net Asset Value (NAV)Net asset value is similar to the book value method only difference is that net asset value is calculated based on the current price in the share market instead of previous prices. Net asset value can be estimated using two methods:

    Only Including Tangible Assets
    NAV=Sum of all tangible assets with current market value - Sum of all tangible liabilities with current market value.

    Including Both Tangible & Intangible Assets
    NAV=Sum of all tangible & intangible assets with current market value - Sum of all tangible & intangible liabilities with current market value.

How Do I Buy Unlisted Equity Shares?

Common people and investors invest in unlisted shares because it offers them multi-bagger returns on the money invested. It isn’t necessary to have an experience in the buying and selling of shares.

Before investing, the major thing that one should keep in mind is to do thorough research about the company you wish to invest in. The reports of the company speak volumes about them and where they would stand in the future. It would also give you a clear picture if the company is worth investing in or not.

Investing in unlisted shares is quite easy, the first and foremost step is to choose a reliable and trustworthy dealer from among the various dealers and platforms present in the market. Once that is done you can follow the following steps:

Step 1:

Choose Your Desired Shares: You can scan through the companies and decide which company to invest in based on the company reports. Once done, you can tell the dealer about your desired investment.

Step 2:

The dealer will share the account details so that you can transfer the trade amount into their account.

Step 3:

Delivery From Dealer: The shares will be delivered to your Demat account by the dealer.

Step 4:

Once the transfer is complete, the payment would be credited to your bank account within 24 hours, depending on the holidays.

How Sharescart Can Help.

With Sharescart, you don't need to worry about anything. Sharescat does thorough research on a company before listing it on the website for you to invest in. Sharescart’s expert team will help you clear any doubt that you may have and assist you in every step of the process.

Top Unlisted Companies & InstaBuy Companies

Sell or Purchase Share (Tentative Price)

Fundamental Analysis

Company Industry Stock P/E P/B Company rating MCAP (in Cr.) Current Price
Pharmeasy e-Commerce -1.7 1 6756 11
Reliance Retail Retailing 141.5 23 698659 1400
Orbis Financial Finance - Investment 64.1 13.7 3065 325

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Hexaware Technologies

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API Holdings

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Sterlite Power

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Signify Innovation

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Chennai Super Kings

CSK is a subsidiary brand of India Cements. This company is quite popular in India as it known for its cricket team.

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Elcid Investment

Elcid Investments Limited was incorporated on 3 December 1981 in Mumbai. It is a Non-Banking Finance Company registered with the Reserve Bank of India.

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Studds Accessories

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Mohan Meakin

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Orbis Financial

Orbis is recognized as a leading player in the Financial Services Industry, providing Securities Services since 2009 to FDI, Corporate, HNI's.

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Schneider Electric

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Success Stories

How Your Money Can Grow With Us

ICICI Prudential

Pre IPO Price:
130
IPO Price:
334
Listing Price:
310
Absoulte return 138%

1 Lac Invested in ICICI Prudential pre-ipo turned into 2.3 Lac after listing.

ICICI Lombard

Pre IPO Price:
400
IPO Price:
661
Listing Price:
680
Absoulte return 70%

1 Lac Invested in ICICI Lombard pre-ipo turned into 1.7 Lac after listing.

HDFC Life

Pre IPO Price:
210
IPO Price:
290
Listing Price:
344
Absoulte return 64%

1 Lac Invested in HDFC Life pre-ipo turned into 1.6 Lac after listing.

AU Small Finance Bank

Pre IPO Price:
175
IPO Price:
358
Listing Price:
597
Absoulte return 241%

1 Lac Invested in AU Small Finance Bank pre-ipo turned into 3.4 Lac after listing.

RBL Bank

Pre IPO Price:
60
IPO Price:
225
Listing Price:
301
Absoulte return 402%

1 Lac Invested in RBL Bank pre-ipo turned into 5 Lac after listing.

BSE

Pre IPO Price:
200
IPO Price:
806
Listing Price:
1069
Absoulte return 435%

1 Lac Invested in BSE pre-ipo turned into 5.3 Lac after listing.

CDSL

Pre IPO Price:
60
IPO Price:
150
Listing Price:
261
Absoulte return 335%

1 Lac Invested in CDSL pre-ipo turned into 4.3 Lac after listing.

Nazara Tech

Pre IPO Price:
545
IPO Price:
1101
Listing Price:
1990
Absoulte return 265%

1 Lac Invested in Nazara Tech pre-ipo turned into 3.6 Lac after listing.

Dmart Avenue

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280
IPO Price:
300
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616
Absoulte return 120%

1 Lac Invested in Dmart Avenue pre-ipo turned into 2.2 Lac after listing.

Reliance Retail Ltd

Price in 2019:
450
Current Price:
3250
Absoulte return 622.22%

1 Lac Invested in Reliance Retail Ltd pre-ipo turned into 7.2 Lac.

Tata Technologies

Price in 2019:
1100
Current Price:
6350
Absoulte return 477.27%

1 Lac Invested in Tata Technologies pre-ipo turned into 5.7 Lac.

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