However, analysts say a lot of investors shifted from the unlisted market to the listed one during the year, as better opportunities emerged in the latter. As valuations now turn expensive in the secondary market, many of them now start shifted back into the grey market, they said.
During the year, a few quality names from the unlisted market decently rewarded those investors, who kept their patience even amid strong panic.
Care Health Insurance, formerly known as Religare health, emerged the leader of this pack of performers. The unlisted stock turned a multibagger, surging to Rs 125-130 from Rs 30-35 during the year. Health insurance players saw a surge in volume during the health crisis.
Unlisted shares of IPL franchise Chennai Super Kings (CSK) jumped over three times during the year from Rs 25-30 to Rs 80-85, as the 13th edition of the star-studded tournament got shifted to the UAE. The company’s annual report showed veteran investor Radhakishan Damani has been investing in the stock actively.
Mobile gaming company Nazara Technologies and Studds Accessories also doubled share prices during the year. Both were beneficiaries of the Covid lockdown. The Rakesh Jhunjhunwala-backed Nazara Technologies and helmet manufacturer Studds are eyeing IPOs soon.
Sandip Ginodia, CEO, Altius Investech said that during the lockdown, a large number of retail investors moved from the unlisted to listed space as the number of scrips and their availability is limited in the former.
“The unlisted space has its own set of entry barriers and risks, while the listed space turned a low-hanging fruit. This space works purely on fundamentals, which require more maturity, bigger capital, greater risk appetite and a long-term investment horizon,” he said.
Shares of Reliance Retail, the retail arm of Mukesh Ambani’s Reliance Industries, almost trebled to Rs 1,350-1,400 during the year. This entity created some buzz as a handful of PE investors participated in the stake sale. HDB Financial Services, NSE and Suryoday Small Finance Bank also rewarded investors with handsome returns.
The unlisted market is unregulated, but it is completely legitimate. However, all deals are carried out in the cash segment. “There is no F&O segment or margin requirement in this market. This makes it less volatile during tough times,” said Dinesh Gupta, Co-founder of UnlistedZone.
Ginodia and Gupta said the unlisted market is riskier as often there is huge misselling of products. Yet, the off-market offer better value to investors with deep pockets.
Many analysts believe the unlisted space has better potential to create long-term wealth, as it offers better opportunity for value picking at an early stage of a business. “This is why renowned investors are switching to this space,” he said.
Vivek Bajaj, Co-founder, StockEdge, said visibility and fair price discovery of this market is very limited.
“The unlisted market would now be buzzing again, as valuations in the listed space get inflated. The off-market may lead the next wave of bull run, as the unlisted scrips have underperformed their listed peers,” he said.