Unlisted Securities

What are unlisted securities?

An unlisted security is a financial instrument which does not meet the requirements of a stock
exchange.They are traded over the OTC market (Over the Counter) ,also called OTC securities.The
trading frequencies are irregular and is dependent upon the private transactions.The private
companies are always unlisted and the shareholders do not enjoy the same privilege as the listed
securities.

This are usually issued by smaller and or new firms and do not comply by the requirements like
market capitalization thresholds or willingness to pay the listing fees.The unlisted securities have
lower liquidity than the listed companies and the transactions are generally slower and cannot be
made until the 2 parties reach an agreement.

Why should you invest in Unlisted securities?

Here comes the important question on why should we invest in unlisted securities?Well firstly they
have high value of investment i.e stocks are not very liquid and are either undervalued or
overvalued.Investing when undervalued can gain significant returns on investments.

Secondly they are less volatile compared to the listed securities,so investors need to worry about the
price fluctuations

Thirdly they are high growth investments .Firms which are smaller in size and are yet to reach public
and investing at this time can yield high returns when it lists on equity markets.

A few examples showing benefits of investing in unlisted securities:

Top traded unlisted securities

HDFC Securities Limited

HDFC Securities posted an excellent FY20 numbers .The PAT grew about 16.7% in FY20 compared to
the last year.Currently it is trading at Rs. 7500 in the unlisted securities.This is phenomenal
considering the slowdown on the economy.
HDB Financial services limited

The HDFC Bank has around 95.3% stake in HDBFSL .Its net interest income grew by 29.2% to Rs
1049.8 crore as against Rs. 812.6 crore in the previous quarter ended December 31,2018.The PAT
grew by 16.5% to Rs 343.1 crore as compared to Rs. 294.4 crore in the prvious year.

A few examples of top unlisted securities which delivered 100 percent return

 Hero Fincorp

 Fino Paytech

 UTI Asset Management Company

 Ujjivan Small Finance Bank

How to do buy unlisted securities?

There are many brokers who deal in unlisted securities and one can also buy the securities through
internal contact.But before venturing into unlisted securities one must always do the comparison
with the peers.A