Where to buy unlisted shares in India?

Pharmeasy NSE BOAT Tata Capital Polymatech Electronics Pvt Ltd

Summary

Unlisted shares are stocks not traded on NSE or BSE and are bought privately in the over-the-counter market, offering high growth potential, especially in Pre-IPO investments, but come with certain risks. Investors can buy them through brokers, AIFs, or private deals, with careful evaluation of company fundamentals, valuation, and exit strategies.

Unlisted Share: Overview

Shares that are not listed on stock exchanges like the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) are known as unlisted shares. These financial instruments, often called over-the-counter securities, are traded in the over-the-counter market. People invest in these shares because they offer significant growth opportunities.

Key Aspects of Unlisted Shares:

• Limited Liquidity:  Unlisted shares have fewer buyers and sellers compared to public equities, making them harder to trade.
• Regulations:  They are subject to SEBI and Company Law provisions, though not as regulated as listed equities.
• Unlisted Company Examples:  Well-known brands in the unlisted market include Tata Capital, PharmEasy, Boat, NSE, Motilal Oswal, Polymatech Electronics.

Types of Unlisted Shares:

 -Pre-IPO Shares
- ESOP Shares
- De-listed Shares

Why Invest in Unlisted Shares?

Investing in unlisted shares offers unique opportunities for high returns, early-stage ownership, and diversification. Here’s why investors consider them:

• Pre-IPO Growth Potential: Many unlisted companies, especially startups and growing businesses, can provide multi-fold returns if they scale successfully.
• Exclusive Investment Opportunities: Invest in prestigious businesses not yet accessible to average stock market investors, such as Tata Capital, Boat, and PharmEasy.
• Portfolio Diversification: Reduces risk by including investments beyond traditional listed stocks.
• Proliferating Profits: Unlisted shares are often undervalued due to limited liquidity, offering significant return opportunities.

Where to Buy Unlisted Shares in India?

Investors looking to buy unlisted shares in India have multiple options:

• Investment Firms & Brokers: Specialized brokers and investment firms like  Sharescart and unlistedzone deal in unlisted shares.
• Direct from Existing Shareholders: Employees or early-stage investors may sell their unlisted shares through private deals.
• Alternative Investment Funds (AIFs): Some AIFs focus on acquiring stakes in unlisted companies, allowing indirect exposure.

Additionally, brokers like Sharescart.com provide detailed research reports and daily updates on unlisted shares. They also have an index, the “Sharescart Unlisted Market Index” (SUMI), designed to track unlisted shares.

Things to Consider Before Buying Unlisted Shares-

Investing in unlisted shares can be rewarding but comes with risks. Here are key factors to evaluate before investing:

• Company Fundamentals: Analyze the company's financials, revenue growth, profitability, and future prospects.
• Valuation Check: Ensure the stock is reasonably priced compared to its industry peers.
• Regulatory Compliance: Verify that the shares comply with SEBI and Company Law regulations.
• Lock-in Period: Pre-IPO shares often have a mandatory lock-in period post-listing.
• Exit Strategy: Plan your exit route, such as IPO, private sales, or long-term holding, as unlisted shares lack easy liquidity.
• Source Credibility: Buy from trusted platforms, brokers, or investment firms to avoid fraud.