Investors hit the jackpot in 2024 with unlisted companies as shares see huge surge

Experts attribute the surge in unlisted stock returns to increased demand and trading activity, driven by investors seeking superior returns compared to listed stocks.

The year 2024 marked a remarkable period for investors and shareholders of unlisted companies as many firms delivered exceptional returns across diverse sectors. Unlisted entities like Tata Capital, Studds Accessories, Nayara Energy, Motilal Oswal Home Finance, Cochin International Airport, NSE and MSEI among others saw a huge jump both, in terms of price rise and trading activity.

Incidentally, the year also saw high profile listings of some of the companies that were in the limelight in the unlisted arena, which, in turn, fuelled the interest level for other unlisted entities.

For instance, Waaree Energies, which was trading at Rs 1,450 a share in unlisted markets in early January 2024, listed on exchanges in October and is currently trading around Rs 2,850 a share. Similarly, shares of Swiggy were trading around Rs 370 a share in January 2024 before listing on exchanges in November; it is currently trading around at Rs 550 a share.

Other standout performers in unlisted markets included Tata Capital (47 percent), Studds Accessories (76 percent), Nayara Energy (346 percent), Motilal Oswal Home Finance (50 percent), Cochin International Airport (92 percent), and the National Stock Exchange (143 percent) among others. The fag end of the year saw a huge upswing in the shares of Metropolian Stock Exchange of India following news that the exchange has raised Rs238 crore through issuance of equity shares on a private placement to a group of investors including promoters of Groww and Zerodha.

This assumes significance as 2024 saw the benchmark indices Sensex and Nifty registering gains of over 8 percent each, while the BSE Midcap and BSE SmallCap indices surged by 26 percent and 29 percent, respectively.

Experts attribute the surge in unlisted stock returns to increased demand and trading activity, driven by investors seeking superior returns compared to listed stocks. The vibrant IPO market of 2024 also played a crucial role, encouraging investors to tap into undervalued unlisted shares to maximise returns while mitigating the risk of missing IPO allocations.

“The unlisted market is witnessing a bull run fuelled by limited supply and surging demand. This enthusiasm is linked to the stellar performance of the primary market, where 51 of 69 IPOs in FY2024 traded above their issue price, with 10-11 delivering over 100% ROI,” says Prashant Tapse, Senior VP and Research Analyst at Mehta Equities.

Tapse further emphasises the significant profit potential of investing in unlisted shares before a company’s IPO, although he cautioned investors to remain vigilant due to high valuation risks and the unregulated environment.

Market analysts caution that valuations can fluctuate dramatically, particularly as companies approach IPOs. While prices often rise during this phase, delays or a downturn in IPO activity could lead to declines. To mitigate risks, experts recommend purchasing shares only from authorised brokers with a proven track record to avoid potential fraud.

Ajay Garg, Director and CEO of SMC Global Securities, highlighted the sector’s impressive performance: “Unlisted stocks delivered a 27.68% return in the past year, outperforming the Nifty 50’s 11.64% return (as of January 2, 2025). Monthly trading volumes surged to $300 million in 2024, up from $50-$60 million in 2023. Notably, Tata Capital generated a 39.33% return in the past year and is expected to list by September 2025.”

As the unlisted space continues to thrive, its appeal appears to be strongly growing among investors eager to capitalise on opportunities ahead of public listings. However, diligence and careful valuation analysis remain critical for navigating this dynamic and rewarding market segment, say experts.