On WhatsApp investor groups, the buzz is less about Dalal Street’s next multi-bagger and more about owning NSE or Tata Capital before their IPOs. Prices circulate like hot tips. “NSE trades near ₹2,000 in the unlisted market, up 80 per cent in a year,” says one post. Another forwards a pitch on Tata Capital, citing Tata Technologies’ 2023 debut, where the shares priced ₹500 in the IPO closed at ₹1,313 on debut. Such chatter highlights the new obsession: unlisted shares, or pre-IPO stocks.
Sellers include employees monetising ESOPs, VC (venture capital)/PE (private equity) funds and AIF (alternative investment funds)/PMS (portfolio management services) strategies trimming stakes, promoters seeking liquidity, and brokers sourcing blocks. Buyers once limited to wealthy individuals, HNIs and insiders now include semi-mainstream investors, where unlisted stocks are pushing to become an integral part of the portfolio.
The IPO euphoria adds fuel. In FY25, 78 main-board public issues raised a record ₹1.62 lakh crore, 2.5x the previous year, according to primedatabase. Yet, allotments remain elusive: 56 issues drew bids over 10x, with 33 of them above 50x. With such odds, many investors are turning to the invisible — unlisted market. The pitch is simple: buy early, ride the buzz and cash out at listing.
And this is no small pool. As Motilal Oswal Financial Services Chairman Raamdeo Agarawal noted in the latest annual report, 1,300 unlisted firms earned ₹100 crore-plus profits in FY24, together raking in ₹7.5 lakh crore. At 20x multiple, this equals about ₹150 lakh crore of potential IPO market-cap.
Still, for all the promise, the unlisted space is a grey zone. Markets are loosely regulated, prices swing wildly, liquidity can be shallow, information patchy and exits tricky. Yet the excitement around names such as SBI AMC, Lenskart, Acko, BOAT, Pine Labs, Rapido, HDFC Securities and Hero FinCorp shows why the buzz is growing louder every week. In other words, the market may be niche compared with India’s ₹450 lakh crore listed universe, but it is alive with promise, speculation and no shortage of risk.
In 2022, a purportedly leaked audio of a furious founder berating a banker over missed IPO shares showed how emotions run high when allocations slip away. A quick scan of IPO forums, X posts or comments in Instagram reels shows retail investors echoing the same anger. Some blame IPO registrars, others mock the lottery system. With huge IPO oversubscriptions, the odds are stacked against small investors hoping to make a quick buck on listing pop.
This frustration is pushing many to the unlisted space. The logic is simple: If the public issue is inaccessible, try to buy earlier in the private market, even at a premium. What was once a closed, opaque dealer-driven activity has broadened in recent years. Digital platforms and wealth managers now act as intermediaries, matching buyers and sellers. Firms such as WWIPL, Unlistedzone, InCredMoney, Stockify, Sharescart and Planify publish price quotes and updates that were earlier unavailable. Entry thresholds have also been lowered.
Another driver is employee stock sales. Start-up staff often monetise ESOPs in unlisted markets, creating steady supply. On the demand side, investors view this as early access to future giants. India has over 110 unicorns worth over $350 billion as per studies. Some, like Flipkart and Physicswallah, already trade in the private market. But risks are evident: Several celebrated start-ups have faced valuation markdowns of 50-70 per cent in recent rounds. In 2024, BlackRock marked down its BYJU’s stake, once worth $22 billion, to zero! PharmEasy’s parent, API Holdings, has also seen valuations collapse from nearly $4 billion in 2021 to a fraction today.
There is also the pull of exclusivity. Investors like owning what others cannot. Screenshots of holdings in buzzy companies circulate on WhatsApp groups as a badge of early access.
With prices shooting up, early investors in unlisted firms become advertisers, boasting of paper gains. For instance, unlisted SBI AMC in the past two years delivered about 64 per cent CAGR, according to data from unlisted trading platform WWIPL. This compares to 52 per cent CAGR by listed peer HDFC AMC in the same period.
Stories of celebrities making 50-100x on pre-IPO bets also catch eyeballs. Since such shares are scarce, artificial scarcity itself adds to premiums.
It is true that the private market generates more return. For instance, Primex 40 is up 20 per cent in the last one year, 94 per cent in the last two years and 215 per cent in the last five years. These returns are much higher than Sensex across periods. The Primex 40 index tracks India’s top private firms, weighted by market cap; current top constituents include NSE, SBI AMC, Tata Capital, Capgemini Technology Services India, Nayara Energy, CIAL, GFCL EV, Hero Fincorp, HDFC Securities and Incred Holdings.
But this early opportunity space carries risks just as significant. Unlike listed equities, no centralised exchange exists for price discovery. Quotes vary across dealers and platforms, with opaque spreads as intermediaries price differently. Some merely arrange transfers between large sellers and small buyers, leaving loyalties unclear. Prices of buzzy counters can swing within days, with spikes often fuelled purely by demand-supply dynamics than fundamentals.
And when unlisted stocks go out of favour, liquidity drops to nil within days. Listed shares can be exited in seconds; unlisted ones can stay stuck for weeks. Even big names can face long dry spells after negative news; for smaller firms, illiquidity can be total.
Exits can become even harder if a company delays its IPO (for example, OYO trying to go public since 2019) or faces valuation markdowns (Mobikwik’s IPO valuation was over 50 per cent lower than last funding valuation pre-IPO in 2021). Lately, IPOs such as HDB Financial, Vikram Solar and NSDL priced 15-40 per cent below unlisted market expectations, according to reports.
The risk-return record of pre-IPO bets underscores the challenge. According to a Client Associates white paper, only nine out of 21 new-age companies that went public between May 2020 and June 2025 generated positive alpha over their pre-IPO price. For every Zomato, Policybazaar, Ixigo or Ather Energy that rewarded early buyers, there were disappointments such as Paytm, Ola Electric, FirstCry and Mobikwik. The distribution is highly polarised, some delivered exceptional gains, but many destroyed capital.
Beyond pricing, liquidity, delays in listing, corporate governance and founder behaviour can also impact investors. Instances have been reported where some start-up founders create new entities, leaving old investors stuck and their value eroded. For investors in young companies, the risk is amplified.
Even larger, older firms are not immune to shocks if management changes course or policy/regulations become unfavourable. Take Dream11, for instance. Its unlisted shares were available on some platforms, and earlier this year the Burgundy Private Hurun India 500 report ranked it the eighth most valuable unlisted company in India. But fortunes can turn fast. On August 21, 2025, the Parliament passed the Promotion and Regulation of Online Gaming Bill within 72 hours of Cabinet clearance, banning real money games. The law will prohibit firms like Dream11 from accepting user deposits for games where players risk losing money.
Information asymmetry is a major challenge. Listed firms provide quarterly disclosures, analyst calls and continuous updates. Unlisted companies, governed by the Companies Act, file audited accounts just once a year, often delayed. Public documents are few, and MCA21 access is cumbersome. MCA21 is the Ministry of Corporate Affairs’ online portal for company information. It provides public access to filings, records and financials of even unlisted firms. But there’s no dependable way to gauge unlisted firms’ business momentum or financial health regularly.
Ordinary investors may unknowingly fund exits for insiders with superior knowledge. With such limited disclosures, this asymmetry puts retail investors at a clear disadvantage.Rating agency actions are published at wide intervals, only if the firm is rated. There is also hardly any reliable analyst coverage in unlisted stocks, who can provide neutral opinion on valuation.
Together, these factors i.e. uncertain pricing and listing timelines, poor liquidity,, governance risks, and patchy disclosures make unlisted shares a very high-risk space. Investors attracted by the potential upside must weigh these challenges carefully.
SEBI Chairman Tuhin Kanta last week said that SEBI may pilot a regulated pre-IPO platform with required disclosures before listing. This may help address many of the pain-points.
Till then, investors must take cognisance of the challenges. Yet while unlisted stocks are risky, for some the charm may be worth it as there are success stories also. Time and again, SEBI has cautioned investors against using unauthorised online platforms for trading unlisted public company securities. Hence those with skills to assess the risk-reward clearly, must stick to regulated brokers and platforms only.
Earlier dealer-driven, trades now happen via brokers, digital platforms and wealth desks that publish quotes and basic data.
In a typical flow (off-market DP to DP (depository participant) transfer), buyer receives an indicative two-way quote and confirms quantity and price. Note, quotes are non-binding and can change quickly. Buyer shares PAN, Aadhaar, Client Master List (CML) from their DP, a cancelled cheque and sometimes a DIS/e-DIS (electronic delivery instruction slip) consent. Address proof and selfie/video-KYC are common.
Intermediary verifies ISIN (International Securities Identification Number), free holdings, pledge/lien status and whether the company’s Articles require ROFR (right of first refusal)/board consent. Some issuers may insist on pre-approval before transfer. Payment is usually NEFT/RTGS/IMPS to an escrow or mapped account (no cash). Many follow Delivery-vs-Payment (DVP) so that funds are released after demat credit. Others use T+1/T+3 settlement. Seller raises an off-market instruction with their DP (NSDL/CDSL). Buyer receives credit in the demat.
In terms of timelines, same-day to T+3 is common. Delays could arise from KYC mismatches, bank cut-offs, DP holidays, or issuer approvals. Large counters need high minimums, though some intermediaries allow smaller tickets (₹50,000-1 lakh).
In terms of capital gain taxes, short-term capital gains or STCG (≤24 months) is taxed at slab for unlisted shares and long-term capital gains or LTCG (>24 months) at 12.5 per cent without indexation. If sold post-listing, Securities Transaction Tax (STT) applies; >one year qualifies for equity LTCG. Pre-IPO shares carry a six-month lock-in.
One of the major operational risks to watch is the lack of exchange arbitration. So, dispute redressal is weaker than in listed markets. Also, watch out for fraudsters and scamsters.
Practical safeguards include using DVP/escrow system, if possible. Try to avoid pay-first arrangements unless you trust the intermediary. Insist on invoice/contract note and transfer proof. Verify ISIN, share class and any transfer restrictions before wiring funds. Keep all KYC and DP details exact; even minor mismatches can stall transfers.
NSDL’s June 3 circular reportedly mandates prior written consent from unlisted companies for off-market share transfers. Consent must be signed by an authorised official and include transferor/transferee details, PANs, share class and compliance with Articles of Association and Companies Act. In this case, timelines could be much longer than T+3.
