Investment in unlisted companies is gaining momentum among investors in India as they intend to gain substantially by the time the listing happens. It has the potential to deliver double advantage to investors one, valuation gains before the listing and second, the listing premium when the company goes for an initial public offering.
A flurry of IPO listings is expected this week, with several companies set to debut on the stock exchanges. Among the most anticipated was HDB Financial Services, the non-banking arm of HDFC Bank, which attracted strong investor interest ahead of its listing. Other notable companies hitting the market include Kalpataru Projects and Ellenbarrie Industrial Gases, making it one of the most active weeks for primary markets in recent months.
HDB Financial Services' unlisted share price
“HDB Financial Services was one of the most liquid scripts in the unlisted market trading in the range of Rs 700-1400 in the last one year before the IPO price band announcement. HDB enjoys its parent company’s brand trust and thus, it has been one of the most awaited IPO this year,” says Manish Goel, Founder & MD, Equentis Wealth Advisory Services Limited.
Has HDB Financial Services' IPO proven to be a good bet for investors?
Has this listing proven to be a good bet by investors who bought unlisted shares of the company much before its listing? Not necessarily, if you were driven by euphoria you may have ended up buying this unlisted company at a steeper price than what was discovered on the day of listing.
Lovaii Navlakhi, Managing Director & CEO of International Money Matters, says, “In unlisted shares, the FOMO effect results in a very high weightage on sentiment, sometimes ignoring the rest. This has resulted in HDB Financial shares trading at 1200 in the grey market and finding the issue at 740. Retail investors must surely give up investing in unlisted shares - as they cannot stomach the risk of a large fall - there is a reason why this is called grey market -- it's not black, but it's certainly not white.”
Investor sentiment has limited role to play as valuation of a company depends largely on its fundamentals. “We have to understand how shares are valued: Based on profits of companies, how their competitors are rated, the future of the industry, profit growth in the past and expectations, and sentiment are some of the bases,” says Navlakhi.
Shares of HDB Financial Services, a non-banking financial company (NBFC) and subsidiary of HDFC Bank, listed at a premium of 12.84% (up Rs 95) on 2 July, 2025, opening at Rs 835 on both the NSE and BSE, against an issue price of Rs 740. The company’s IPO issue was subscribed 17.65 times overall, led by Qualified Institutional Buyers (QIBs) who bid 58.6 times their portion. Non-institutional investors subscribed 10.5 times, while retail interest was more muted at 1.5 times.
For investors of HDB Financial Services, the Rs 740 price band for the company’s IPO is 40% lower than the Rs 1,225 levels it was fetching just days ago in the unlisted market. Investors who bought the unlisted stock last year at Rs 1,550 will have to face a 52% loss in value before the IPO even gets listed on the exchanges.
Goel further adds, “On the pricing, we are seeing an increasing trend of IPOs being priced at a discount of 25-40% for higher investor participation which largely gets adjusted on the listing day to some extent. It's worth noting that a similar scenario occurred with Waaree Energies late last year where the unlisted price was around Rs 2,500, and the IPO was priced at Rs 1,500 per share, only to list at Rs 2,500 and presently trading higher.”
Retail investors showed significant interest in buying pre-IPO shares of HDB Financial Services. However, their response to the company’s IPO was lukewarm. “Many companies pursue pre-IPO sales because they sense that public market demand may not be as exuberant as expected, and they want to lock in valuations while investor sentiment is still warm. HDB Financial’s tepid IPO oversubscription (by retail investors) compared to the frenzy in its unlisted shares underscores this dynamic,” says Mohit Bhandari, CEO of Stratzy, a financial technology startup.
Exclusive access offered to investors to buy unlisted shares has an overpowering impact on their judgement about fair valuation of the company. “Retail investors often get lured by the illusion of exclusivity in pre-IPO stocks, forgetting that liquidity can remain a chronic problem—just look at Chennai Super Kings shares languishing without an exit or PharmEasy’s steep valuation slide after early trades,” says Mohit Bhandari, CEO of Stratzy, a financial technology startup.
We are now getting more and more cases where such investors of unlisted companies are getting a humbling experience about the gains at the time of IPO which did not turn out the way they had anticipated. “In case of HDB as well, we saw some resentment around the IPO price band being 30-40% lower than unlisted market price. Though it opened 13.5% up today on listing. We remain of the view that HDB is currently trading near its fair value and to a discount to both its peers Bajaj Finance and CholaFin, which is justified by the difference in customer profile and return metrics,” says Goel.
Bhandari further adds, "In the end, why chase the mirage of low-liquidity pre-IPO bets when there are so many established, regulated companies already listed with transparent price discovery? If you truly want to back early-stage businesses, angel investing might be a more honest path than buying pre-IPO shares from someone trying to de-risk their own exposure. Investors should ask themselves whether they’re buying into a promising company or simply providing an exit for someone else."
Risks of investing in unlisted shares
Investing in unlisted shares has many pitfalls which investors must factor in. Investing in unlisted shares can be far riskier than it seems at first glance. Narendra Solanki, Head Fundamental Research- Investment Services, Anand Rathi Shares and Stock Brokers underlined the risks of investing in shares of unlisted companies. “Prices in the unlisted market aren’t transparent, they’re often driven by sentiment, hype, or insider news, making them prone to manipulation. Liquidity is another big issue; you can’t always buy or sell when you want, as these trades usually happen through market intermediaries, not an open exchange. There’s also a lack of transparency, with many deals not publicly documented, and a real risk that the person selling you the shares may not deliver them even after receiving payment.”
The risks don’t end here. “Valuing unlisted companies is tricky too, especially if there are no listed peers to compare with. On top of that, private firms don’t have to follow the same disclosure norms as listed companies, so you may not get regular updates on their financials or business health. There’s also the chance that the company may never list, leaving you stuck with shares you can’t exit. Your stake could get diluted if the company issues more shares in future rounds. And without any direct regulatory or exchange oversight, there could be other hidden risks that aren’t obvious at the time of investing,” says Solanki.
In a recent post on X (formerly Twitter), Zerodha founder Nithin Kamath also highlighted the risks of investing in unlisted shares and said that many retail investors buy into these shares based on hype and expected listing gains, often without fully understanding the business or its fundamentals. He also cited the example of HDB Financial Services, whose shares were trading at a premium of nearly ₹1,100 in the unlisted market just a few years ago, far higher than the IPO price of ₹740 per share. This, he said, shows how unlisted shares can be significantly overpriced, leaving investors exposed to potential losses.
Kamath warned that the unlisted space lacks transparency, has low liquidity, and operates without much regulatory oversight, which makes it riskier than the regular stock market. He urged investors to exercise caution, avoid getting swayed by brand value or social media hype, and conduct proper due diligence before investing in unlisted companies.
Ladder7 Wealth Planners Private Limited’s MD and Principal Officer Suresh Sadagopan chimes in with his views, “There is no price discovery mechanism and the unlisted prices can be unrealistically high, resulting in losses on listing. Liquidity is low; one may not be able to sell them. IPO may not come up as expected and if there is lack of liquidity, one can get stuck for long.”
Investors often carry unrealistic expectations when entering the unlisted space. “Investments in unlisted companies are done with the assumption that one will get it cheap and there would be listing gains. But it is not always true like in the case of HDB & Swiggy. What is going to happen in NSE's case will be interesting to watch, with all the hype and excitement around that share, Sadagopan added.
Swiggy, which went public in November 2024, listed at Rs 412 on the BSE at a 7% premium over its IPO price of Rs 390. Following shareholder approval for an IPO in April, the company’s stock witnessed significant interest in the unlisted market, resulting in a substantial increase in share prices, as per an Economic Times report. From July to September, its shares surged by nearly 40%, rising from Rs 355 to Rs 490 approximately. However, the shares have had a rough time since the listing, having plummeted by about 39% since then. In 2025 alone, the stock as lost 41% of its value.
HDB Financial Services IPO draws strong investors interest
HDB Financial Services launched its much-anticipated Rs 12,500-crore IPO from June 25 to June 27. The offer included a fresh issue of Rs 2,500 crore and an offer for sale of Rs 10,000 crore by HDFC Bank, with the price fixed at Rs 740 per share. The IPO drew strong interest across many investor categories, receiving over 42.6 lakh applications.
While high-profile listings often generate buzz, investors should be cautious when dealing with unlisted shares or grey market premiums. Prices can be volatile, and without regulatory oversight, there’s a higher risk of overpaying or falling for speculative hype before the stock actually lists.
( Originally published on Jul 02, 2025 )
A flurry of IPO listings is expected this week, with several companies set to debut on the stock exchanges. Among the most anticipated was HDB Financial Services, the non-banking arm of HDFC Bank, which attracted strong investor interest ahead of its listing. Other notable companies hitting the market include Kalpataru Projects and Ellenbarrie Industrial Gases, making it one of the most active weeks for primary markets in recent months.
HDB Financial Services' unlisted share price
“HDB Financial Services was one of the most liquid scripts in the unlisted market trading in the range of Rs 700-1400 in the last one year before the IPO price band announcement. HDB enjoys its parent company’s brand trust and thus, it has been one of the most awaited IPO this year,” says Manish Goel, Founder & MD, Equentis Wealth Advisory Services Limited.
Has HDB Financial Services' IPO proven to be a good bet for investors?
Has this listing proven to be a good bet by investors who bought unlisted shares of the company much before its listing? Not necessarily, if you were driven by euphoria you may have ended up buying this unlisted company at a steeper price than what was discovered on the day of listing.
Lovaii Navlakhi, Managing Director & CEO of International Money Matters, says, “In unlisted shares, the FOMO effect results in a very high weightage on sentiment, sometimes ignoring the rest. This has resulted in HDB Financial shares trading at 1200 in the grey market and finding the issue at 740. Retail investors must surely give up investing in unlisted shares - as they cannot stomach the risk of a large fall - there is a reason why this is called grey market -- it's not black, but it's certainly not white.”
Investor sentiment has limited role to play as valuation of a company depends largely on its fundamentals. “We have to understand how shares are valued: Based on profits of companies, how their competitors are rated, the future of the industry, profit growth in the past and expectations, and sentiment are some of the bases,” says Navlakhi.
Shares of HDB Financial Services, a non-banking financial company (NBFC) and subsidiary of HDFC Bank, listed at a premium of 12.84% (up Rs 95) on 2 July, 2025, opening at Rs 835 on both the NSE and BSE, against an issue price of Rs 740. The company’s IPO issue was subscribed 17.65 times overall, led by Qualified Institutional Buyers (QIBs) who bid 58.6 times their portion. Non-institutional investors subscribed 10.5 times, while retail interest was more muted at 1.5 times.
For investors of HDB Financial Services, the Rs 740 price band for the company’s IPO is 40% lower than the Rs 1,225 levels it was fetching just days ago in the unlisted market. Investors who bought the unlisted stock last year at Rs 1,550 will have to face a 52% loss in value before the IPO even gets listed on the exchanges.
Goel further adds, “On the pricing, we are seeing an increasing trend of IPOs being priced at a discount of 25-40% for higher investor participation which largely gets adjusted on the listing day to some extent. It's worth noting that a similar scenario occurred with Waaree Energies late last year where the unlisted price was around Rs 2,500, and the IPO was priced at Rs 1,500 per share, only to list at Rs 2,500 and presently trading higher.”
Retail investors showed significant interest in buying pre-IPO shares of HDB Financial Services. However, their response to the company’s IPO was lukewarm. “Many companies pursue pre-IPO sales because they sense that public market demand may not be as exuberant as expected, and they want to lock in valuations while investor sentiment is still warm. HDB Financial’s tepid IPO oversubscription (by retail investors) compared to the frenzy in its unlisted shares underscores this dynamic,” says Mohit Bhandari, CEO of Stratzy, a financial technology startup.
Exclusive access offered to investors to buy unlisted shares has an overpowering impact on their judgement about fair valuation of the company. “Retail investors often get lured by the illusion of exclusivity in pre-IPO stocks, forgetting that liquidity can remain a chronic problem—just look at Chennai Super Kings shares languishing without an exit or PharmEasy’s steep valuation slide after early trades,” says Mohit Bhandari, CEO of Stratzy, a financial technology startup.
We are now getting more and more cases where such investors of unlisted companies are getting a humbling experience about the gains at the time of IPO which did not turn out the way they had anticipated. “In case of HDB as well, we saw some resentment around the IPO price band being 30-40% lower than unlisted market price. Though it opened 13.5% up today on listing. We remain of the view that HDB is currently trading near its fair value and to a discount to both its peers Bajaj Finance and CholaFin, which is justified by the difference in customer profile and return metrics,” says Goel.
Bhandari further adds, "In the end, why chase the mirage of low-liquidity pre-IPO bets when there are so many established, regulated companies already listed with transparent price discovery? If you truly want to back early-stage businesses, angel investing might be a more honest path than buying pre-IPO shares from someone trying to de-risk their own exposure. Investors should ask themselves whether they’re buying into a promising company or simply providing an exit for someone else."
Risks of investing in unlisted shares
Investing in unlisted shares has many pitfalls which investors must factor in. Investing in unlisted shares can be far riskier than it seems at first glance. Narendra Solanki, Head Fundamental Research- Investment Services, Anand Rathi Shares and Stock Brokers underlined the risks of investing in shares of unlisted companies. “Prices in the unlisted market aren’t transparent, they’re often driven by sentiment, hype, or insider news, making them prone to manipulation. Liquidity is another big issue; you can’t always buy or sell when you want, as these trades usually happen through market intermediaries, not an open exchange. There’s also a lack of transparency, with many deals not publicly documented, and a real risk that the person selling you the shares may not deliver them even after receiving payment.”
The risks don’t end here. “Valuing unlisted companies is tricky too, especially if there are no listed peers to compare with. On top of that, private firms don’t have to follow the same disclosure norms as listed companies, so you may not get regular updates on their financials or business health. There’s also the chance that the company may never list, leaving you stuck with shares you can’t exit. Your stake could get diluted if the company issues more shares in future rounds. And without any direct regulatory or exchange oversight, there could be other hidden risks that aren’t obvious at the time of investing,” says Solanki.
In a recent post on X (formerly Twitter), Zerodha founder Nithin Kamath also highlighted the risks of investing in unlisted shares and said that many retail investors buy into these shares based on hype and expected listing gains, often without fully understanding the business or its fundamentals. He also cited the example of HDB Financial Services, whose shares were trading at a premium of nearly ₹1,100 in the unlisted market just a few years ago, far higher than the IPO price of ₹740 per share. This, he said, shows how unlisted shares can be significantly overpriced, leaving investors exposed to potential losses.
Kamath warned that the unlisted space lacks transparency, has low liquidity, and operates without much regulatory oversight, which makes it riskier than the regular stock market. He urged investors to exercise caution, avoid getting swayed by brand value or social media hype, and conduct proper due diligence before investing in unlisted companies.
Ladder7 Wealth Planners Private Limited’s MD and Principal Officer Suresh Sadagopan chimes in with his views, “There is no price discovery mechanism and the unlisted prices can be unrealistically high, resulting in losses on listing. Liquidity is low; one may not be able to sell them. IPO may not come up as expected and if there is lack of liquidity, one can get stuck for long.”
Investors often carry unrealistic expectations when entering the unlisted space. “Investments in unlisted companies are done with the assumption that one will get it cheap and there would be listing gains. But it is not always true like in the case of HDB & Swiggy. What is going to happen in NSE's case will be interesting to watch, with all the hype and excitement around that share, Sadagopan added.
Swiggy, which went public in November 2024, listed at Rs 412 on the BSE at a 7% premium over its IPO price of Rs 390. Following shareholder approval for an IPO in April, the company’s stock witnessed significant interest in the unlisted market, resulting in a substantial increase in share prices, as per an Economic Times report. From July to September, its shares surged by nearly 40%, rising from Rs 355 to Rs 490 approximately. However, the shares have had a rough time since the listing, having plummeted by about 39% since then. In 2025 alone, the stock as lost 41% of its value.
HDB Financial Services IPO draws strong investors interest
HDB Financial Services launched its much-anticipated Rs 12,500-crore IPO from June 25 to June 27. The offer included a fresh issue of Rs 2,500 crore and an offer for sale of Rs 10,000 crore by HDFC Bank, with the price fixed at Rs 740 per share. The IPO drew strong interest across many investor categories, receiving over 42.6 lakh applications.
While high-profile listings often generate buzz, investors should be cautious when dealing with unlisted shares or grey market premiums. Prices can be volatile, and without regulatory oversight, there’s a higher risk of overpaying or falling for speculative hype before the stock actually lists.
( Originally published on Jul 02, 2025 )
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