How to choose Right Unlisted Shares for Investment? – Know Everything in Detail

The choice is the most important thing in investing in unlisted shares. This article will take you through the crucial aspects of choosing the right unlisted shares for investments.

Unlisted shares are rare and investors refer to them as ‘hidden gems. Do you know why?

It is because these shares can earn you such profits which listed shares may not. However, it all depends on which unlisted stock you are going for.

How to find Right Unlisted Shares?

The first thing you need to do is to find and shortlist some of the unlisted shares. You can do this by searching on the internet. Multiple brokers and intermediaries deal in unlisted shares.

You can check the websites, and choose some of the unlisted shares. You can shortlist based on the company’s popularity, price of the unlisted shares, availability, and other factors.

Here are few ways to find Right Unlisted Shares –

• Valuation of Unlisted Shares
• Comparing different Brokers Website
• Brokers Advice

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Valuation of Unlisted Shares

Once you shortlist a few of the unlisted shares, then you can go for the valuation part. This is the most important aspect of choosing the right unlisted shares.

You can apply the different methods to find the fair market value of the unlisted shares. However, it is difficult to find the fair market value easily for unlisted shares.

However, you can use the discounted cash flow method or the book value method and find the most accurate (possibly) value of the shortlisted shares.

Comparing on different Broker’s Website

After you find the value of the stocks you shortlisted, you can check the price the brokers are offering. The brokers for unlisted shares share information about the price of the unlisted share with the probable investor.

You need to call them and take the information. Then you can compare the price on different broker’s platforms.

Once you find the broker with the right price, that suits your requirement, you can buy the stocks from the same broker.

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Broker’s Advice

Finally, there is another way which can simplify your job. Some brokers deal in unlisted shares who advise about unlisted stocks to the investors.

You can take their suggestions, and then do your research as well. Never choose unlisted shares, just by depending on the brokers.

How to find Right Unlisted Shares? – Conclusion

To conclude, we can say that choosing the right unlisted stocks is difficult. However, if you have an appetite for risk and want rewards against that, you can test unlisted shares as well.

If you follow the process mentioned above, you can choose unlisted stocks wisely.

FAQs of Right Unlisted Shares

Here are few FAQs on this topic –

Why unlisted stocks are known as ‘hidden gems’?

Unlisted stocks are known as ‘hidden gems’ because, at times, these shares give the investors exponential returns. If you can choose the right unlisted shares for your portfolio, then you can be overwhelmed by the returns of unlisted shares.

Who are unlisted share brokers?

Not all brokers in India deal in unlisted shares. There are very few of them who deal in unlisted stocks.

Where can I find the company’s financial reports?

You can find the company financials on the website of the company only. You can also find them on the broker’s website if the brokerage house publishes the same for the unlisted stocks they deal in.

Which aspects of unlisted shares I can compare?

You can compare the FMV, the reputation of the company, years the company is in business, management’s performance, and others.

What is fair market value?

Fair Market value is the value of the company which you can derive by deducting the book value of the liabilities of the firm from its total assets. You can also derive FMV by discounting the future cash flows.

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