Market watchers say a storm is brewing in anticipation of an imminent listing. Investors are flocking to the unlisted market to buy these shares before the unlocking of value begins.
Some companies have strong balance sheets and reliable financing to support this frenzy.
ETMarkets.com has collated a list of unlisted names that have caused a stir on the gray market in recent weeks amid talks that they could be listed within the next 18 months.
HDB Financial Services (HDBFS) | Current unlisted market share price:
With the strong roots of the HDFC group, HDB Financial Services is the leading NBFC stock in the gray market and sees a lot of demand from investors. Founded in 2008, NBFC caters to both retail and commercial customers. It has a well-established business of loans, fee products and BPO services with a strong capital base. It has been given an ‘AAA’ rating by CRISIL and Care Ratings for its long-term debt and banking facilities. Current debt and CP are rated A1+, which makes it a reliable financial institution.
Expert Comment: Sagar Shah of Ascent Wealth Advisors believes it’s a good NBFC bet. Despite its hefty valuation, it is poised to grow with a clear and strong balance sheet.
“People are buying this stock on the unlisted market at a premium. There is a high probability that the IPO will receive a strong oversubscription. That’s how there is this buoyancy,” he said.
Technology | Current unlisted market share price: Rs 650
Mumbai-based Nazara Technologies is one of the leading mobile game companies operating in India, West Asia, Africa, Southeast Asia and Latin America. Its operations include subscription, free and Esports businesses.
The company has independent subsidiaries, named Next Wave Multimedia and NODWIN GAMING.
Big Bull Rakesh Jhunjhunwala is backing this venture, which is credited with some of the most popular games on the Google Play Store, such as World Cricket Championship, Chhota Bheem Race and Motu Patlu Game.
According to the company, the profit drop to Rs 1 crore in the 17-18 financial year was due to special and one-time cashless expenditures including group stock payments and employee stock options.
Experts Be: Unlisted Zone’s Dinesh Gupta says the company has recently lost some of its luster. However, it has been very active in acquisitions, having recently acquired a stake worth Rs 7.5 crore in India’s leading puzzle app Sports Unity.
Tamilnad Mercantile Bank (TMB) | Current unlisted market share price: Rs 370
Formerly known as Nadar Bank, this lender has more than 500 branches and 12 regional offices across the country. All branches are computerized and interconnected. Hailing from Tamil Nadu, the bank has strong roots in southern India.
Experts Be: This stock has received mixed reactions from market experts. Sandip Ginodia of Abhishek Securities sees TMB as a valuable bet. “The stock is now worth 1.25 times its book value. A strong loan book is maintaining high estimates,” he said.
UnlistedZone’s Gupta says the growth of YES Bank and RBL Bank has led to the stock’s devastation in the unlisted market as there are better bets in the market.
Retail Reliance | Current unlisted market share price: Rs 600
Reliance Retail, a division of the Reliance group, is the largest retail company in India. The joint venture led by Mukesh Ambani runs the Reliance Fresh, Reliance Smart and Reliance Market Stores, and has a turnover of Rs 1.3 lakh. It also operates all Reliance Digital, Mini Express Stores and Jio Stores.
Besides that, it also runs Reliance Trends, Trends Women, Reliance Jewels, Reliance Footprints and fashion website Ajio.
According to its financial year 19 annual report, the subsidiary of Reliance Industries has 10,415 stores in more than 6,600 cities and towns of India, covering a total area of more than 22 million square meters as of March 31, 2019.
Experts Be: Shah of Ascent Wealth believes the stock’s valuation is very high compared to Avenue supermarkets of its kind. Reliance Retail is operating on a large scale, always maintaining pressure on profit margins. “The company has a very strong promoter. The retail story is set to flourish in India. ”
He and Ginodia have endorsed the stock from a long-term perspective.
Education Accessories I Current unlisted market share price: Rs 700
Studds is one of the largest manufacturers of two-wheeled helmets in the world. It holds a 25% market share in India, boasting safety, comfort and style.
Founded in 1983, the company has two manufacturing facilities spread over 6 acres in Faridabad, Haryana.
The company has been present in 39 countries and launched 36 new products over the past three years in seven different sizes. The company also manufactures accessories for two-wheelers such as jackets, gloves and glasses. The company submitted DHRP to Sebi.
Experts Be: Gupta said Studds would be the biggest beneficiary of the new Motor Vehicle Act. The demand for helmets in the market is high and the company has the largest market share. He pointed out that helmet manufacturers that are not ISO certified will soon face heavy fines.
Chennai Super Kings (CSK) | Current unlisted market share price: Rs 30
The unlisted shares of this IPL franchise have attracted a lot of attention amid rumors surrounding MS Dhoni’s possible retirement. CSK is IPL’s most successful franchise, winning the title three times. The unlisted script traded in the range of Rs 12-15 in the last week of November 2018 and then rose to Rs 30-35 in mid-April 2019.
Experts Be: Ginodia and Shah find the stock very attractive. Ginodia said that the company’s full-year NPAT is at a high level as expected. However, Shah suspects the brand’s value will decline after Dhoni’s retirement. However, he also sees stock performance at par.