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How to Buy Unlisted Shares in India? [Step by Step Guide]

Interested in knowing how to buy Unlisted Shares in India? Then keep reading this post till the end.

In 2022, Indian unlisted companies have seen an exceptional 100-150% growth (year-on-year). Even during their growth stages, unlisted companies like Swiggy, Parle and Razorpay, etc., have generated immense value from private organizations and players.

how to buy unlisted shares in india

There are increasing inquiries about the benefits of owning unlisted shares and how to buy unlisted shares in these companies. And also about the risks involved compared to the publicly listed companies that come under constant monitoring & regulation from the Security and Exchange Board of India(SEBI).

Every expert, visionary, and business owner has observed the profit potential of unlisted companies over recent years.

Once you understand how to buy unlisted shares in India, you can study the valuation of several unlisted companies on the top company list.

The growth rate of unlisted companies is calculated based on principal multiples like the Enterprise value(EV) to Earnings before interest, taxes, interest, depreciation, and amortization(EBITDA) ratio, Price to Earnings ratio, which have proven to have one thing in common-exponential returns.

And the growth factor is calculated based on principal multiples like the Enterprise value(EV) to Earnings before interest, taxes, interest, depreciation, and amortization(EBITDA) ratio, Price to Earnings ratio, which have proven to have one thing in common-exponential returns.

how to buy unlisted shares in india

So, where should an investor start? And how to buy shares of unlisted companies?

Keep reading to find out…

How to buy Unlisted Shares in India online? (Step-by-Step process)

 

  • Step1: Simple KYC Verification to buy/sell unlisted shares in India

After a simple verification process, you can easily buy unlisted shares for the potential companies of your choice. Common documents required to complete the verification for buying unlisted shares online:

  1. Aadhar Document
  2. Bank Cheque Document
  3. Pan Card Document
  4. Client Master Report(CML) Document

Once you upload the above documents and complete the KYC verification process, the next step is to buy the shares of the company you plan to invest in. Wealth Wisdom India has over 50+ Unlisted companies you can choose to invest in. Factors such as EBITDA, Networth, Return on Equity, etc. are available on the “Wealth Wisdom India” websitewwipl, which helps you navigate efficiently and take a quick look at the numbers before making a decision.

Next, comes the question: How to buy unlisted shares in India after the verification process?

  • Step 2: Processing & Completion of the Deal

The functional and easy-to-understand interface of the “Wealth Wisdom India” website makes buying unlisted shares easy with no frills. 

  1. Select the unlisted company name.
  2. Choose whether you offer to sell or buy the unlisted shares.
  3. Then, enter the offered price for the unlisted shares.
  4. The final step is to enter the number of shares(Quantity) you wish to buy, and the platform automatically calculates the total price.

But before you understand and get the solution on- how to buy unlisted shares in India, you should understand the advantages of investing in unlisted companies. 

Also read:

What is the Delisting of Shares?
What are ESOP Shares?

Advantages of Investing in Unlisted Companies:

 

1) Benefits of Investing Early

Unlisted companies are less liquid in comparison to listed companies. Due to this, the price of the unlisted stocks remains undervalued for a significant time, opening the gates for small investors and experienced private players to buy at lower rates. A beginner should invest a decent amount of time in acquiring the proper knowledge necessary to make well-researched forecasts over fairytale speculations.

2) Diversification

The risk dynamics of unlisted shares differ from those of listed shares, which can benefit those who invest in listed shares. Diversifying the portfolio with them can be advantageous. A listing on the stock exchanges could result in a substantial upside for these stocks in the future. Investors should, however, evaluate several parameters alongside the price and invest in undervalued stocks with significant earnings growth potential.

Three Ways to Invest in Unlisted Companies:

  • The direct method to invest in unlisted shares

Indian startups and other unlisted companies are searching for investors who believe in their vision and mission. Companies that are in active search of investors can be directly approached. 

  • Invest in unlisted shares through the representatives

The popular investment alternative- Employee Stock Ownership Plan(ESOP), offers employees to become owners of the company they work for. In this way, an employee can easily invest in an unlisted company through the company pay packages.

  • Invest in unlisted companies through Private firms/brokers

There are around 75000 Indian startups as per the 2022 reports, this comes with a substantial number of brokers & private online platforms that not just offer easy buying and selling but also provide valuable information from experts and end-to-end consulting to beginners as well as new investors.

Frequently Asked Questions(FAQS):

  • How many unlisted companies are there in India?

Over 10 lakh companies are unlisted in India, most of which are from Bengaluru, Mumbai, and Delhi. With that, there are around 66,000 unlisted public companies in the country.

  • How to buy/sell unlisted shares online?

Buying/ selling unlisted shares has become easy and simple, with comprehensive information and guidelines provided at every step. Wealth Wisdom India provides easy buying/selling of unlisted shares, pre-IPO/ ESOP shares, delisted shares, Illiquid thinly traded listed, etc.

  • Are unlisted companies private or public?

The companies that are not listed on the stock exchange are called unlisted companies. Unlisted companies can be private unlisted or public unlisted companies.

  • What kinds of tax reliefs apply to unlisted companies?

An individual can benefit from two main tax reliefs by investing in unlisted companies. Enterprise Investment Scheme(EIS) and Seed Enterprise Investment Scheme(SEIS).

  • Do SEBI rules apply to unlisted companies?

No, SEBI rules do not apply to unlisted companies. However, if an unlisted company wants to make an IPO, it must adhere to SEBI guidelines.

  • Is diversification important when investing in unlisted companies?

Diversification means investing in different investments with distinct returns and risk potentials. Unlisted companies are less volatile than other types of investments, so it’s good to keep a balance between volatile and non-volatile investments.

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