Unlisted shares, as the name suggests, are the shares of the companies that are still private. The best examples of unlisted shares currently are Tata Technology, Chennai Super Kings (CSK), Reliance Retail, HDFC securities, Studds Accessories, Sterlite Power, HDB Financials, Boat, etc. However, the scenario is a bit different in the grey market. There are basically two kinds of unlisted companies. First, child companies of well-known parent companies. Second, new-age business technology businesses include media technologies, gaming and e-commerce companies. Unlisted shares investment brings many benefits to the table, such as lowering the volatility, reducing liquidity leading to undervaluation, and diversifying the risk.
Speaking of unlisted share trading, you are likely to come across the term “Grey Market”. Generally, the term grey refers to something that is neither exactly black nor white. To an extent, it is also the same for “Grey Market”. The burning question still hovers the head - what is the grey market? You are in luck, as here in this blog, we will discuss the grey market and how to buy unlisted shares in the grey market.
What is Grey Market?
As stated earlier, the grey market is not exactly black and white. It is an unofficial market where the trading of financial securities takes place. People also call it a 'Parallel Market'. So it's quite simple that in the grey market, unlisted share trading takes place (shares or assets that are yet to release in the official market). Apart from this, trading in the grey market also takes place when certain shares are suspended from the official market.
Grey Market Stock
Where to buy unlisted shares in India will lead you to the grey market. The grey market has been in India for a long time. Apparently, this has become a market where traders and investors check for the authenticity of unlisted shares. Moreover, grey market stocks refer to the process of trading and bidding a company’s unlisted shares offline.
Whenever any company puts up shares before they are issued by the Initial Public Offering (IPO), it is called grey market stocks. Unlisted share purchase from the grey market is legal in India and transferring of shares between the parties is done via off-market transactions.
Grey Market Premium
Coming the grey market premium is the amount at which unlisted shares trading takes place in the grey market. When unlisted share purchase takes place in the grey platform, aka unlisted share trading platform.
Similar to any other trading, even unlisted share trading in the grey market is likely to come up with certain risks, hence it is important to partner up with the best-unlisted share broker in India. - Stockify, to buy and sell shares.
How Are Shares Traded In This Market?
If you are wondering how to buy unlisted shares in India in the grey market, look no further than Stockify. Simply follow the steps mentioned below: -
- Connect with the unlisted stock dealer like Stockify and agree on the price
- Submit your KYC details
- Place your order and make the payment
- Once we receive all the application details and payment in the Stockify bank account, we send the buyers a notification that their said shares are transferred along with the invoice
Factors Affecting The Valuation Of Unlisted Shares In Grey Market?
Unlisted Shares in the grey market are valued based on certain factors, as mentioned below: -
- Business Model - The valuation of unlisted shares is dependent on multiple factors. However, one very important factor is the company's business model. If the company has a superior business model (High market share, High growth, superior product, Zero Debt, free cash flow and robust financial model) then it is expected to demand a premium vs its other competition and expected to have a higher valuation.
- It depends on the profits made by the company ( PE Ratio)
- The net worth of the company ( Book value)
- Demand and supply of the said unlisted shares
- Performance of the company in terms of its finances(balance sheet strength)
How Are Prices For Unlisted Shares Determined?
There are different ways to determine unlisted share prices in India. According to the benchmark definition, here are the methods to determine the value of an unlisted share: -
- Recent Transaction Price Method - In this method, we use the last price of the unlisted share trading.
- Book Value Method - In this method, investors calculate all the book values of the company's tangible assets to determine the unlisted share price.
- Price To Earnings Ratio - In this method, the unlisted share price in India depends on the company's future cash flow.
- Net Asset Value - This method uses the current value of assets of the company. Both tangible and into-tangible assets are applicable for this method.
How To Buy And Sell Unlisted Stocks In The Grey Market?
Stockify is the most definitive answer to the question - of how to buy unlisted shares in India. You just need to connect with us, and from there, our professionals will take you on a guided journey for buying and selling unlisted stocks. At stockify, we have industry stewards with expertise in market research and analysis, and we are the best broker for unlisted shares in India. To give access to the investors to a world of unlisted Indian Equity, you just have to partner with us to buy or sell unlisted shares.
