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An Unlisted Company Share Is Best To Get More Return On Your Investment

Jul 11, 2022

Investing in the stock market is something that almost everyone does nowadays. People have realized the significance of the stock market and are willing to take risks in exchange for better returns on their investments.

Unlisted shares are a new term in the stock market that many people are unfamiliar with. So we'll explain what an unlisted company share and listed shares are and what the unlisted share price is.


Listed Shares: What Are They?

Shares of a corporation are referred to as Listed Shares if they are exchanged on a stock exchange. The National Stock Exchange and the Bombay Stock Exchange both list businesses like HDFC Bank, Nestle, and ITC. On these stock exchanges, we can purchase and sell the shares through a stockbroker or an online brokerage account.

Unlisted company shares: what are they?

Unlisted shares/stocks are described as those that are not traded on official stock exchanges. For instance, JIO and OLA both have unlisted shares. Similar to this, a lot of businesses have not yet gone public because they do not meet the criteria to be listed on an official stock exchange.

Since they are not listed, unlisted shares have less liquidity than public shares, making them riskier. Despite being less open, their valuations are more reliable. Therefore, your returns from that share can be much increased if you can choose an unlisted share that has the potential to be listed and the firm has development potential.

What is an unlisted share price?

Here is a list of the five techniques utilized in India to value unlisted stocks.

  • Method of Recent Transaction Price
  • Book Value Approach
  • Price to Earnings Ratio or Present Value Method
  • Identified Intangibles and Goodwill Are Included in Net Asset Value
  • Excluding Goodwill and Identified Intangibles from Net Asset Value

These 5 techniques were employed by a corporation to value its unlisted shares on the unlisted stock market.

Is purchasing unlisted shares safe?

Unlisted shares are traded over-the-counter (OTC), where buyers and sellers interact through middlemen yet exchange the instruments directly. Therefore, dealing in unlisted shares carries a credit risk because this market is neither organized nor regulated. Unlisted shares are, however, typically exchanged between businesses, sizable brokerage firms, and HNIs or financial institutions. Therefore, the risks are reduced based on the standing of the market participants of unlisted shares. If you can select the ideal gateway for trading in unlisted shares, the risk also falls.

The primary risk, nevertheless, is inherent in the investment decision, which is whether or not the company whose unlisted stocks you are purchasing will go public if the price of shares will rise, or whether it will fail due to lack of business. Before dealing in any unlisted share, the only choice is to do thorough research of the company's fundamentals and other variables.

Stock market investing has always been dangerous, but taking that risk has almost always paid off. Although purchasing unlisted shares can be riskier than purchasing listed shares doing so can yield excellent returns if you choose the proper unlisted shares. Investing in unlisted shares involves more research and study, so make an effort to fully understand the share before making a decision.

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