It’s not just the listed entities that are riding the bull run. The buoyant investor mood has percolated down to unlisted shares, several of which are enjoying their own moment in the sun. 

In the last six months, Indian Potash, Waaree Energy, Tata Capital, Nayara Energy and SBI Funds Management have gained over 100 per cent. NSE’s stock price has seen a 69 per cent spurt to ₹5,900. Other notable gainers in the past year include Axles India (up 220 per cent), Orbis Financial Services (211 per cent), Manjushree Technopack (210 per cent) and Utkarsh CoreInvest (114 per cent).

Primex 40 — an index that tracks the performance of top 40 unlisted companies across sectors and market capitalisations — has delivered a 49 per cent return during this period, compared with 20 per cent gains logged by Nifty 500 Multicap 50:25:25.

Investors typically lap up unlisted shares in anticipation of an initial public offering (IPO) over the next 10-12 months. Waaree Energies, for instance, filed its draft prospectus for an IPO in December and is hoping to raise over ₹3,500 crore. Similarly, Tata Capital, an upper-layer NBFC and a subsidiary of Tata Sons, is reportedly preparing for an IPO to abide by RBI regulations.

Also read: Mukesh Ambani weighs listing RJio first

Conversely, share prices can drop if an IPO is delayed. Shares of Oravel Stays has slipped sharply after it withdrew its draft prospectus earlier this month.

“The fortunes of these stocks is mainly linked to whether the companies will tap the market for an IPO in the near future. Investors may also flock to an unlisted company if its valuations are lower than the peers trading in the listed space,” said Umesh Chandra Paliwal, Co-founder, UnlistedZone.

Robust financials and corporate actions can also result in a spurt in prices. NSE saw recent surge in prices after it recommended issuing bonus shares in a 4:1 ratio and a ₹90 per share dividend to eligible shareholders.

Caution ahead

Such shares are traded offline through select brokers and bought by wealthy individuals, retail investors and family offices.

According to experts, the unlisted space is susceptible to frauds and investors need to buy shares from authorised brokers with a reliable track record. “There have been instances where investors have paid the money but did not get the shares transferred to their account,” said a research analyst.

Investors need to be careful about valuations and avoid overpaying for the shares as there may be several imponderables on the road to listing, said Deepak Jasani, Head-Retail Research, HDFC Securities.

Also read: Adani Energy Solutions to raise ₹12,500 crore via QIP

“There is no regulation on these trades and the bid-ask spread can be wide. For capital market intermediaries, share transfers could take time as the shareholders may need to be fit and proper as per SEBI laws,” he said.

In the past six months, 48 companies have raised over ₹45,000 crore by way of IPOs. Twenty firms hold SEBI approval to raise ₹13,000 crore, while 36 companies are awaiting SEBI nod to raise another ₹42,000 crore.

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