When people talk about investing in the stock market, they usually mean buying shares listed on major exchanges like NSE, BSE, or NYSE. But there’s a growing segment of investors exploring unlisted shares — a lesser-known but potentially rewarding asset class.
In this guide by Grow More & More, we’ll break down everything you need to know about unlisted shares — including how to buy pre-IPO shares in India, the risks involved, how to maximize returns safely, taxation rules, and expert tips to invest safely.
What Are Unlisted Shares?
Unlisted shares are equity shares of companies that are not listed on any stock exchange. These companies are privately held, and their shares aren’t traded publicly.
Common examples include:
- Startups and pre-IPO companies – Businesses planning to go public in the future.
- Subsidiaries of listed companies – For example, HDFC Securities before its IPO.
- Delisted companies – Firms that were once public but no longer trade on an exchange.
Buying unlisted shares means you’re investing in a company before it goes public — often at an early stage. If the company grows and eventually lists on an exchange, your shares could significantly appreciate in value.
Unlisted Shares vs Listed Shares
| Aspect | Listed Shares | Unlisted Shares |
|---|---|---|
| Availability | Traded on stock exchanges (NSE, BSE, etc.) | Traded privately, not listed publicly |
| Liquidity | High – can be bought/sold any trading day | Low – finding buyers/sellers takes time |
| Price Discovery | Market-driven, transparent | Negotiated privately, may lack transparency |
| Regulation | SEBI regulated, mandatory disclosures | Limited regulation, fewer disclosures |
| Risk Level | Moderate (depends on stock) | Higher risk, but higher potential reward |
Why Investors Buy Unlisted Shares
1. Early Investment Opportunities
Buying pre-IPO shares lets investors get in before the general public. If the company has a successful IPO, early investors can benefit from significant capital appreciation.
2. Diversification
Adding unlisted shares to your portfolio provides exposure beyond the stock market, balancing your overall risk.
3. Potentially High Returns
Some of India’s biggest IPO success stories — like Nykaa, Zomato, and Paytm — delivered massive gains to pre-IPO investors.
4. Access to Emerging Sectors
Private companies are often at the cutting edge of innovation, giving you early exposure to new industries like EVs, fintech, and AI.
Risks of Investing in Unlisted Shares
While unlisted shares can be rewarding, they also carry unique risks that investors must consider:
1. Liquidity Risk
Unlike listed shares, you cannot sell unlisted shares instantly on an exchange. Finding a buyer may take time, especially in a downturn.
2. Valuation Risk
Prices are determined through private negotiations and may not reflect true market value. Overpaying is a real possibility.
3. Company Risk
Startups and private companies face higher business failure rates. If the company shuts down, investors could lose their entire investment.
4. Regulatory Risk
Unlisted companies are not required to disclose as much information as listed companies, making it harder to assess financial health.
5. Longer Holding Period
You might have to wait years for a liquidity event (IPO, acquisition, or buyback) to realize returns.
How to Buy Unlisted Shares in India
If you’re wondering how to buy unlisted shares, there are several routes available:
1. Through Dealers and Brokers
Specialized brokers connect buyers and sellers of unlisted shares. They source shares from employees, early investors, or promoters and sell them to retail investors.
2. Employee Stock Ownership Plans (ESOPs)
Employees of private companies sometimes sell their vested ESOPs in the secondary market. Investors can purchase these shares through intermediaries.
3. Pre-IPO Platforms
Several online platforms specialize in pre-IPO shares. These platforms simplify the process, provide company data, and ensure legal compliance.
4. Direct Investment
High-net-worth individuals (HNIs) sometimes invest directly by negotiating with company promoters or participating in funding rounds. This is less common for retail investors due to minimum investment size.
Taxation of Unlisted Shares in India
Understanding taxation is crucial before you invest:
- Short-Term Capital Gains (STCG):
If you hold unlisted shares for less than 24 months, gains are taxed as per your income tax slab. - Long-Term Capital Gains (LTCG):
If you hold for 24 months or more, gains are taxed at 20% with indexation benefit (adjusting purchase price for inflation).
(Note: Tax rules can change. Always consult a tax advisor before investing.)
Steps to Invest in Unlisted Shares Safely
Here’s a simple process to follow:
- Do Your Research – Study the company’s business model, revenue, and growth prospects.
- Verify the Source – Deal only with SEBI-registered intermediaries or trusted platforms.
- Understand Valuation – Check how the price compares with peers or previous funding rounds.
- Diversify – Avoid putting too much money into a single unlisted company.
- Plan Your Exit – Know whether you’ll sell after IPO, to other investors, or through buyback offers.
Popular Unlisted Shares in India (2025)
Some companies with high demand in the unlisted space include:
- HDFC Securities
- Reliance Retail
- Tata Technologies (Post-IPO, still partly traded privately)
- National Stock Exchange (NSE)
- Studds Accessories (helmet manufacturer)
(Demand for specific shares changes frequently — check updated availability with brokers.)
Who Should Invest in Unlisted Shares?
Unlisted shares are ideal for:
- Experienced investors seeking diversification.
- HNIs and UHNWIs willing to invest for the long term.
- Risk-tolerant investors looking for early-stage opportunities.
If you are a beginner or need quick liquidity, it’s better to focus on listed equities or mutual funds.
Final Thoughts
Unlisted shares are an exciting way to invest in India’s growth story, offering early access to promising businesses before they go public. However, they are not for everyone — liquidity issues, valuation risks, and limited transparency make them riskier than listed stocks.
If you decide to invest, start small, diversify across companies, and work with trusted platforms. With the right approach and patience, unlisted shares can be a powerful addition to your portfolio.
Start Your Journey in Unlisted Shares Today!
Ready to explore pre-IPO opportunities? Visit Grow More & More to get expert insights, latest unlisted share prices, and investment guidance.
FAQs: Demat Account vs Trading Account
Q1: Are unlisted shares legal to buy in India?
Yes. Buying unlisted shares in India is legal, provided you purchase through authorized intermediaries or platforms and follow SEBI and RBI guidelines.
Q2: How do I sell unlisted shares?
You can sell them through the same broker/platform where you bought them, to other private investors, or wait for a liquidity event like an IPO or buyback.
Q3: Are unlisted shares riskier than listed shares?
Yes. Unlisted shares carry higher risks due to lower liquidity, less transparency, and valuation challenges. But they also offer potentially higher returns.
Q4: Can NRIs invest in unlisted shares in India?
Yes, NRIs can invest in unlisted shares subject to FEMA guidelines. They should consult a registered broker and check for RBI compliance.
Q5: How is the price of unlisted shares determined?
Unlike listed shares, prices are based on private negotiations, company performance, and demand-supply factors in the grey market.
