In the past 2–3 years, the Indian unlisted equity market has undergone a structural shift. Once dominated by institutional investors like venture capital firms, angel investors, private equity funds, and family offices, the unlisted space is now witnessing a surge in retail investor participation. This "retailisation" is changing the character of the market — and not always in a good way.

1. What’s Happening in the Unlisted Market?

Earlier, the unlisted market was quiet and primarily driven by long-term investors who took bets on companies years before their IPOs, when the risks were higher but so were the potential rewards. These were typically informed investors who understood business fundamentals, market cycles, and had patience.

But in recent years, retail investors have started flocking to the unlisted market, especially in anticipation of big IPOs. Many investors now view the unlisted space as a shortcut to IPO listing gains — assuming that buying a stock before the IPO means guaranteed profits.

However, this assumption ignores the fact that supply in the unlisted space is extremely limited. When news of an IPO breaks, demand spikes, and because there’s not enough supply, prices shoot up irrationally.

2. Retail Participation: When It Helps and When It Doesn’t

Retail investors can make money in the unlisted market, but only if they understand the rules of the game.

Here’s what’s happening now:

• Most retail investors are entering just before the IPO, when valuations are already inflated due to media hype and FOMO (Fear of Missing Out).
• They end up buying stocks at 1.5x to 2x the IPO-expected price, which leaves very little room for listing gains.
• Add to that the 6-month SEBI lock-in period post-listing, and you're stuck with a high-cost investment that may underperform.

Some Real-Time Examples:

• HDB Financial: IPO expected around ₹800–850. Unlisted price already at ₹1,000.

• NSE: IPO valuation expected near ₹1,500. Unlisted shares trading at ₹2,300

• Tata Capital: IPO may price at ₹350–400. Unlisted market quotes are above ₹1000.

• Swiggy: Pre-IPO, shares were available between ₹350–₹500. IPO price was ₹390. After listing, the stock touched ₹600 but remained under lock-in. By the time lock-in ended, it had fallen to ₹325 — showing how paper profits can vanish if you can’t exit on time

In such scenarios, you’re buying high with low upside. Unless the IPO lists significantly higher — and stays there beyond lock-in — your returns will be muted, or worse, negative.

3. So When Should You Actually Buy Pre-IPO Shares?

Retail investors should treat the unlisted market as a long-term investing platform, not a place to chase short-term news flow.

Buy When:

• The company is fundamentally strong and reasonably valued. Use our screener to filter fundamentally strong companies available at reasonable valuation: https://unlistedzone.com/screener
• There is no buzz about the IPO — meaning less demand and better pricing.
• You’re ready to hold for 2–3 years without worrying about daily prices.

Avoid When:

• Media channels are hyping the IPO.
• The share is trading at a big premium to its expected IPO price.
• You're investing just for the listing gain, without checking fundamentals.

4. Examples That Prove the Point

Waaree Energies:

• In 2020–21, it was available in the unlisted market for ₹250–₹500. Hardly anyone bought.
• As IPO rumours emerged, price jumped to ₹750–₹2,500.
• Those who bought early made 3x–5x returns.
• Those who entered at ₹2,000+ took significant risk — post-listing price fell near ₹2,000 during lock-in.

NSE:

• A few years ago, it traded at ₹600 (bonus-adjusted).
• Even 2 weeks before SEBI’s recent nod, it was at ₹1,500.
• As soon as IPO news broke, it hit ₹2,300+.
• At this level, unless it lists well above ₹3,000 and sustains for 6 months, returns will be limited.

PPFAS:

• Rarely traded, no IPO plans.
• Still, it jumped from ₹6,000 to ₹10,000 due to low float and speculation.
• Why pay so much for a company that offers no clear exit?

Swiggy:

• Traded in unlisted space at ₹350–₹500 just before IPO.
• IPO was priced at ₹390.
• Touched ₹600 after listing — but shares were under 6-month lock-in.
• After lock-in, stock dropped to ₹325. Paper profits vanished due to poor timing.

Final Thoughts – A Note of Caution

The unlisted market is not for speculative traders. It’s for patient investors who want to enter early, before the crowd comes in.

• Don’t follow IPO headlines blindly.
• Don’t buy just because everyone else is.
• Don’t assume every pre-IPO share will double post-listing.

✅ Instead, focus on valuation, fundamentals, and time horizon.

✅ Invest quietly and early — that’s when the best value is available.

That’s how serious investors make money in the unlisted space.