In the past few years, there has been an increase in the grey market trading of products and services in India. The reason for this is that companies do not want their product or service to be listed on official exchange platforms
The corporation is expected to reward investors with hefty listing gains, according to dealers from an unregulated market for trading in unlisted shares. Even when the secondary market is at all-time highs, they are positive on the strong primary market mood.
What is the unlisted market?
An unlisted security is a financial instrument that does not meet the conditions for listing on a formal exchange. Unlisted securities are sometimes known as OTC securities since they are traded over-the-counter (OTC) by market makers.
Unlisted equity shares are those issued by companies that are not listed on any stock exchange and hence are not publicly traded. Stockholders of such companies do not have access to the same benefits as shareholders of companies that are listed on stock exchanges.
However, just because the shares aren’t listed doesn’t imply they can’t be exchanged. Shares of a few unlisted firms (hidden gems) are traded in off-market transactions.
Unlisted equity share companies may become listed in the future, and India has a large unlisted stock market. Purchasing unlisted equity shares of a company might unlock significant value when the stock is listed (IPO route) on the stock exchanges in the future. If your stock isn’t listed, you’ll have to find a buyer on your own or through your broker. Unlisted company promoters also undertake pre-IPO placements before launching an IPO.
Some Unlisted share companies in India that are doing exceptionally well are Bennett Coleman and co. ltd (Times Group), Amul, Zomato, Patanjali Ayurveda, Flipkart, One97 Communications Ltd (Paytm), Big Basket and so many more.
Indian pesticide is at an all-time high
Following a string of successful IPOs in June, the market is anticipating the launch of India Pesticides (IPL). The stock is expected to perform well based on the premium that the company’s unlisted shares enjoy on the grey market. India Pesticides’ grey market premium jumped to Rs 50-55 on Friday, up from Rs 33-35 the day before. It could result in a stock price increase of at least 18-20% over the issue price. The company sold its shares in the range of Rs 290-296.
India Pesticides’ Rs 8 billion initial public offering (IPO) received a robust reaction from investors, with the issue being subscribed 29 times.
The segment earmarked for retail investors received 11.3 times the number of subscriptions, while the non-institutional investor category received 51.9 times the number of subscriptions.
According to unlisted stock dealers, the company is projected to offer considerable listing returns to investors. They are upbeat even though the primary market is at all-time highs, and the secondary market is also at all-time highs.
Five IPOs (Krishna Institute of Medical Science, Shyam Metalics, India Pesticides, Soma Comstar, and Dodla Dairy) raised Rs 9,625 crore in June, making it a productive month for primary market marketplaces.
The month of July is predicted to be busier than normal. Two enterprises, GR Infraprojects and Clean Science and Technology are slated to go public in the coming week, with others to follow later in the month.
Unlisted equity shares of both GR Infra and Clean Science are trading at a considerable premium in the grey market, ranging from 30 to 50 percent. As far as values go, both businesses have left something on the table for investors.
IPL’s sales and EBITDA grew at a 37 percent and 48 percent CAGR, respectively, from FY18 to FY21, while its net profit grew at a phenomenal 60 percent CAGR. Over the FY18-FY21 period, the company generated consistent operational cash flow (OCF) and free cash flow (FCF), with cumulative OCF and FCF of Rs 170 crore and Rs 80 crore, respectively. The IPO was priced at 25.3 times FY21 profits, compared to 47 times on average in the industry.
Shyam Metalics’ shares are currently up 23% on the BSE over their issue price of Rs 306, while Sona Comstar’s are up over 27% over their issue price of Rs 291. On June 24, both stocks were listed on stock exchanges. Meanwhile, Dodla Dairy and KIMS have increased their issue prices by 37% and 22%, respectively.
Almost all of the major unlisted equity shares are covered by Babli Investment’s thorough unbiased analysis and extensive investigation. Our team makes certain that if you invest in unlisted equity share your hard-earned money in the best stocks with the most profit potential.
One should consider buying unlisted shares as it is the hidden gem that will come back for you in near future. Unlisted equity shares are held by wealth managers and banks, so people who want to buy unlisted shares then they can do so through private placements.