Unlisted share or grey market has always been a topic of discussion. It is because everyone wants to raise their wealth, and investment in unlisted shares is the best option. When it comes to investment in unlisted shares, risk is always associated with it. Why? Because SEBI does not directly regulate the grey market, that’s why lack of transparency and risk of fraud, limited liquidity, etc., are some associated risks.
Since the NSE IPO created a buzz in the market, NSE unlisted shares have captured the attention of a lot of potential investors. Though investment in unlisted shares can offer you a flabbergasting return, it is crucial to consider the liquidity risk involved in NSE unlisted shares. In this blog, we will talk about the liquidity risks involved in NSE pre-IPO stocks. Let’s get started now.
What Is Liquidity Risk?
Before moving further, it’s important for you to know about liquidity risk. In simple words, liquidity risk in pre-IPO stocks is the challenge or difficulty an investor faces while buying and selling unlisted shares. It is because of the lack of a centralised marketplace. In the grey market, trading volumes are generally low, which leads to bid-ask spread, adversity affecting buying and selling prices of unlisted shares.
Liquidity Risk Involved In NSE Unlisted Shares
Unlike listed stocks, unlisted shares are majorly traded in low volume, and most of the shares are held by promoters or long-term investors. Here are some risk factors contributing to the liquidity risk involved in NSE unlisted shares. Have a look at them below:
Lack of transparency
In the listed stock market, companies need to report their quarterly results and notify the Stock Exchange if any significant event affects the stock price. In the case of unlisted shares, transparency is not always present, which makes it challenging to know the company’s performance. So, lack of transparency is one of the liquidity risks involved in NSE unlisted shares.
Stock pricing challenge
Determining the fair price of NSE pre-IPO stocks can be a little challenging. Since unlisted shares are not traded on a stock, knowing the real stock price can be a challenge for you as an investor. Investors have to rely on private transactions, appraisals, and other less reliable methods to determine the price of NSE unlisted stocks. This could result in potential disagreements over pricing.
Limited Exit Option
In publicly traded stocks, investors have the option to sell their stocks on stock exchanges at any time. However, in an unlisted share market, investors have limited exit options. If you invest in NSE unlisted shares, you will have to find a buyer through a private stock broker who can guide you through the buying and selling of unlisted stocks.
Unlike listed stock exchanges, unlisted shares require investors to invest in the stocks for a longer period of time. It is because finding a seller or buyer can take a lot of time. So, this lack of liquidity can tie up capital for extended periods for investors.
Limited Pool Of Buyer & Seller
Since unlisted shares are not publicly traded on the stock exchange platform, the number of buyers and sellers are less compared to the listed stocks. So, this lack of participants in unlisted stocks makes it challenging for investors to find a counterpart for a trade, especially when you want to do a large transaction.
Though liquidity risks are always there in unlisted stocks, it is crucial for you to take the help of a stockbroker who can guide you with buying and selling unlisted stocks in India seamlessly.
Make Trading Easy With Stockify
Stockify is a renowned online stock broking platform in India that helps potential investors buy unlisted shares of pre-IPO companies. Although investment in NSE unlisted shares might be a little tough for you, stocks at Stockify can give you every minute of information about the company to make your trading easy.
From EPS growth to EBITDA, profit & loss statement and revenue report, we offer every information about the company to help you invest in NSE pre-IPO stocks. You can earn a high return on your investment and reap many benefits by investing in unlisted stocks. Connect with expert brokers at Stockify to start your trading journey now.
What is the current valuation of NSE unlisted shares?
Ans. The current valuation of NSE pre-IPO stocks is Rs. 3550, and the total outstanding shares as of March 2023 is Rs. 50 crore. Therefore, the valuation of NSE is Rs. 1,85,000 crore. The company’s valuation in the past three years surged by 3X.
How much revenue did the company generate last year?
Ans. In FY 22-23, the company earned a revenue of Rs. 11,856 crore compared to FY 21-22, which was Rs. 9,500 crore. So, this is a positive growth for the company.
How do I buy NSE unlisted shares?
Ans. It is easy to buy NSE pre-IPO stocks with Stockify. We have expert brokers who can guide you through the buying and selling of unlisted shares. Connect with us today.
How do you check the daily share price of NSE stocks?
Ans. You can check daily updated prices of NSE pre-IPO stocks on Stockify. We regularly update the price of unlisted stocks based on market trends, fluctuations, and the company’s performance. You can subscribe to our website for daily updates.
Why should I trust Stockify?
Ans. Stockify is a leading online stock-broking platform with a team of expert stock brokers. We help potential investors buy and sell unlisted shares of top pre-IPO companies in India. So, connect today.