Unlisted/ Pre-IPO Stocks Recommendation from the Portfolio of Prasenjit Paul
Service Offerings
The service will provide unlisted/pre-IPO stock recommendations from Prasenjit Paul's portfolio, along with proof of shareholding in his personal demat account. You can expect 3-5 unlisted/pre-IPO stock buying opportunities over a 1-year subscription period, with a minimum holding period of 2-3 years or more. We can also facilitate the purchase of unlisted/pre-IPO stocks through our channel partners.
In the past, unlisted stocks have generated returns of 2 to 10 times (more details provided in the later section). However, some stocks have also incurred losses of 50% to 90%. With our in-depth research capabilities, we are targeting a minimum return of 2 to 3 times (or more) in overall portfolio over a period of 2 to 3+ years. Please note that we do NOT offer any promise of assured returns. Any assured return promise is also illegal as per the regulatory body. Kindly read the "Risk" and "FAQ" sections carefully before making any investment decision.
The service is suitable for investors with a high-risk appetite and a minimum overall equity portfolio value of Rs.15+ lakhs, due to the lot size restrictions in unlisted stocks (more details in the FAQ & Risk section below). Investors can allocate up to 20-25% of their overall portfolio value to unlisted stocks with a very long-term investment horizon. We may decline subscriptions if we determine that an investor is attempting to allocate 100% of their capital to unlisted shares.
Rs. 39,000, including tax (Introductory offer only for existing clients. This service is currently available exclusively to our existing clients. We plan to open it to the public in the coming weeks, at which point the fees will increase slightly.) Please note that NO discounts are available, as our aim is to discourage small investors from subscribing due to associated risk. If the subscription fee is beyond what your portfolio can comfortably support, this service may not be suitable for you. In such cases, we kindly ask that you refrain from subscribing.
Why to invest in unlisted/Pre-IPO shares?
Unlisted stock investing involves buying shares of companies that are not yet listed on stock exchanges like NSE or BSE. We are aware about multiple IPOs generating 2-3x returns within months of listing, so investing at the pre-IPO stage can offer huge potential. However, it's important to note that while pre-IPO investments can yield high returns, they also carry the risk of significant losses. Let's explore this with two recent examples.
Tata Technologies launched its IPO in November 2023. In 2020, unlisted shares of the company were traded at ₹1,000-₹1,200, which rose to ₹5,000-₹6,000 by 2022. The company then announced a 1:1 bonus issue and a face value split from ₹10 to ₹2, reducing the price of shares to ₹500-₹600. By December 2023, after listing, the shares were traded at ₹1,200-₹1,300. The effective return from the 2020 unlisted price to the listing price was 10-11 times, and from the 2022 unlisted price to the listing price, around 2 times.
Other notable stocks that generated multi-fold returns for pre-IPO investors include ICICI Prudential, AU Small Finance Bank, RBL Bank, BSE, CDSL, Nazara Technologies, Dmart etc.
The much hyped PayTm unlisted shares were traded at ₹3,500-₹3,600 during the pre-IPO period in 2021. However, after listing in November 2021, the price crashed to ₹1,500-₹1,600, resulting in a 50-60% loss. To make matters worse, SEBI rules required a 6-month lock-in period for all unlisted shares post-listing, leaving pre-IPO shareholders with no option but to watch the share price plummet. By the time they could sell, 6 months after listing, the stock had nose-dived to ₹500-₹600, causing an 80-85% loss.
PayTm was not alone—unlisted shares of companies like Policy Bazaar and AGS Transact also resulted in losses for shareholders.
500% ++
-85%
Moral of the Story -
Not all unlisted shares will generate wealth for investors. With over 100 unlisted shares available in the
market, only a small percentage can deliver significant returns in the long run. There are no brokerage research reports or reliable, updated information on unlisted stocks. To make matters worse, unlisted companies may not release quarterly financial results or corporate updates like their listed counterparts. We enjoy the challenge of conducting in-depth research and have successfully discovered many multibagger microcaps over the past 13 years, where no brokerage coverage was available. Therefore, we believe this research service will be a perfect fit for us & will offer immense value to investors looking to explore wealth creation opportunities in the unlisted space.
Risk of Investing in Unlisted Shares
- Liquidity -
- Lack of Information & research reports-
There is no regulation that mandates unlisted companies to disclose financial results and business-
specific updates to shareholders. With few exceptions, the majority of unlisted companies do not disclose quarterly financial results or business-specific updates. Annual results are often made public, but typically only 4-5 months after the fiscal year ends. The company's website is the only reliable and authentic source of information. The lack of reliable information creates significant challenges when researching unlisted stocks.
Unlisted shares are not traded on recognized stock exchanges like NSE or BSE.Instead, they are traded in private markets and may not trade
regularly. To maximize returns, our strategy is to invest in unlisted shares and exit after the SEBI mandate lock-in period of six months from listing. However, the listing process might be delayed due to factors beyond the company's control. Therefore, in case of emergency fund withdrawal requirement, you may not have the opportunity to exit the stock, or you may not get a fair price. This means one should only invest in unlisted shares if they are confident they won't need to withdraw funds for at least the next 2-4 years or longer.
- Delayed or Cancelled IPO -
For profit maximization, our strategy is to purchase unlisted shares approximately 3-18 months** prior to an IPO
and exit once the lock-in period (6 months) ends after listing. However, predicting the exact timing of a company's IPO is challenging, as it depends on multiple regulatory bodies and overall market conditions. We have observed that, despite a company filing a Draft Red Herring Prospectus (DRHP) for an IPO, the process can be delayed by 1 to 2 years or more due to regulatory hurdles. In some cases, the company may even cancel its IPO plans altogether due to adverse market conditions. In such situations, our holding period may be extended, or we may need to sell the stocks in the unlisted market. Investors may not receive a fair price when selling in the unlisted market.
** From past instances, we noticed investment in unlisted shares around 3-18 months prior IPO offers maximum profit making opportunity with risk balancing. Around 1-2 months prior IPO or while the IPO is confirmed, unlisted shares are traded around IPO price or sometimes more than IPO price leaving lesser room for profit maximization. This is why research and timely stock recommendations in the unlisted space are very challenging and require in-depth expertise.
- Prolonged Bear Market -
Bull market always witness increased IPO activities whereas number of IPOs declines during bear phase. If the overall market
enters a bear phase lasting 2-3 years, many unlisted companies may postpone their IPOs, leading to a liquidity dry-up in the unlisted market. This could result in a prolonged holding period or forced selling in the unlisted market.
- Conclusion -
Considering all the above-mentioned risks, it is very unlikely to achieve a 100% success rate in unlisted stock recommendations. However, over
a 2-3 year period, even with a 60% success rate (3 out of 5 stock recommendations being successful IPOs), the overall portfolio can potentially generate a 2-3x return or more. To minimize the chance of an overall loss, here are some basic guidelines you should follow:
- Minimum investment horizon of 2-3 years. The investable fund should not have any withdrawal requirement for atleast the next 2-3 years.
- Regardless of circumstances, it is essential to remain subscribed to our service for a minimum of 2 years, invest in all the recommended stocks, and follow all entry/exit alerts. We may share 3-5 buying opportunities each year.
- Don’t panic or stop investing regardless of market situation.
- Don’t extrapolate recent performance to estimate future return.
By adhering to these basic principles, one can significantly enhance their potential for wealth creation in the unlisted space.
FREQUENTLY ASKED QUESTIONS
It is 100% legal to buy or sell unlisted shares through bank account transactions. This practice is quite common among high-net-worth individuals (HNIs). Since unlisted shares are credited to CDSL/NSDL demat accounts just like listed ones, it is also considered safe. From a regulatory perspective, there is no direct supervision by SEBI or RBI over entities dealing in unlisted shares. However, there are a few SEBI directives; the most notable one being that shares acquired during the unlisted stage can only be sold at least six months after listing. In other words, there is a six-month lock-in period for unlisted shares post-listing.
Unlisted shares are not traded through SEBI-registered brokers like Zerodha, UpStox, Angel One, etc. Instead, they are traded through unregistered dealers. It’s important to exercise caution, as there have been instances of fraud (non-delivery of shares after payment) in this market. For retail investors, distinguishing between trustworthy and unreliable dealers can be challenging. Therefore, we have partnered with a few trusted dealers to facilate unlisted shares purchase for our paid clients. Below is the purchase process:
- Send an email to info@paulasset.com with Subject Line “ Purchase Request of unlisted shares (company name, Qty – )”. For different shares kindly send separate email.
- We will revert back with the equity details, best price as on date, fund transfer details & required documents. Unlisted shares will be credited in your existing demat account so holding an active demat account (with any broker) is must for unlisted shares purchase.
- After fund transfer, you need to reply on the same email with all documents (fund transfer receipt, PAN card copy, cancel cheque & CMR copy). Details on how to obtain CMR copy are provided below.
- Once we receive these documents, we will forward accordingly & the shares will be credited in your demat account within the next 2 working days (Excluding Saturday, Sunday & public holiday). There are options to verify the unlisted shares once they are credited to your demat account, and the verification process will be communicated after subscription.
How to obtain CMR copy?
CMR stands for Client Master Report. It is a digitally signed PDF issued by a broker to the client, containing details of the demat account. This document is essential for transferring unlisted shares to the correct demat account. To download the CMR copy, you need to log in to your existing trading account. This is a straightforward process, and all major brokers provide tutorials on how to download the CMR copy or you need to email them to get CMR copy. A simple Google search with “How to download CMR copy in Zerodha/chaoice of broker” will also yield desired result. Here are links from a few major brokers:
Zerodha – Click here for details
Groww – Click here for details
UpStox – Click here for details
If you face any difficulties downloading the CMR copy, please contact/email your broker; they will provide you the same.
Buying Freeze in Unlisted Shares – Just like listed shares, sometimes unlisted shares enters into buying freeze zone due to lack of sellers. This is a rare occurrence but can happen & we may not able to facilitate buying. In such case, one can wait or check with all available external dealers for getting shares at a bit higher rate.
It is NOT possible to purchase unlisted shares of all companies prior to their IPO. There are only about 150-200 companies traded in the unlisted space. These shares are sourced when a company raises substantial funds through private placements before listing. This means that if a company has never raised funds from a broad investor base prior to listing, it is virtually impossible to purchase their unlisted shares (Amul is a good example).
Frequently traded unlisted shares come from companies that have already raised a large sum of funds from the public, and upon listing, they typically turns out mid-cap or large-cap stocks. Small-cap, micro-cap stocks, or those listed in the SME segment are rarely available in the unlisted space and if available often trade at very high lot sizes (ranging from ₹10 lakh to ₹20 lakh). Therefore, most of our recommendations in the unlisted space will belong to the mid-cap or large-cap category, with minimum investment lot sizes of ₹50,000 to ₹2 lakh.
Our goal is to sell unlisted stocks after they are listed to maximize wealth. However, in case of an emergency or in exceptional situations if we recommend selling, you can also sell shares in unlisted market. You can approach any dealer or simply email us with the desired selling quantity. We will check with our channel partners and provide you with a quotation accordingly. Similar to the buying process, we will send you a detailed email with steps to follow. The selling process and fund realization may take 3-4 working days.
Post listing Selling – Once the shares are listed and the six-month lock-in period is complete, you can sell the shares on NSE/BSE from your existing trading account, just like regular shares. Unlisted shares are credited to your existing demat account, so once they are listed, those shares will automatically reflect in the same trading account.
You will receive all corporate action benefits, such as dividends, bonuses, rights, etc., during the unlisted stage (if applicable). Whether the shares are listed or unlisted, once they are reflected in your demat account (CDSL/NSDL), you are entitled to receive benefits and email communications regarding all corporate actions. Please ensure that your email address is updated in your demat account.
A simple Google search will reveal multiple websites displaying price & other details of unlisted shares. However, price can vary because different dealers can quote different price. There is no such official price like listed peers but you can get a price range. You can follow company specific news from various website but except company website there is no such official platform from where one can guarantee the authenticity of data. For listed companies NSE/BSE are source of authentic data, but nothing such in unlisted space.
Yes, the subscription will provide short, concise, and to-the-point research notes on the recommended stocks. There is no fixed frequency for sharing updates; they will be provided as needed. As long as your subscription is active, you will receive exit and profit booking calls. Access will not remain active if you do not renew after your membership expires. However, if you purchase unlisted shares through us, we will continue to share exit alerts for those shares even after your membership expires. Please note that new stocks and updates will not be available after membership expiration.
There are two types of tax occurrences:
- Purchase and Sale at the Unlisted Stage:
- Holding for less than 24 months: Short-Term Capital Gains Tax (STCG) applies according to your tax slab.
- Holding for more than 24 months: Long-Term Capital Gains Tax (LTCG) at 12.5%.
- Purchase at the Unlisted Stage but Sale at the Listed Stage (Our Desired Situation):
- The tax rate is the same as for listed shares.
- Holding for less than 12 months: Short-Term Capital Gains Tax (STCG) at 20% (STCG increased to 20% from the previous rate of 15% starting June 2024).
- Holding for more than 12 months: Long-Term Capital Gains Tax (LTCG) at 12.5% (LTCG increased to 12.5% from 10% starting June 2024).
Please consult your tax advisor to stay updated on tax rates and relevant provisions.
First and foremost, never invest 100% of your equity portfolio in unlisted shares. It is advisable to keep around 20-25% of your equity portfolio invested in unlisted shares to balance risk and reward. The remaining 75-80% can be divided into two parts, with each part deployed based on our High Volume Stock Recommendations and Smallcap/Microcap Multibagger Potential Stock Recommendations.
In most cases, the lot size of each unlisted share can range from Rs. 50,000 to Rs. 1 lakh, and in some instances, it can be as high as Rs. 2 lakhs. Considering an approximate investment of Rs. 1 lakhs in each stock, a portfolio of five stocks would require a total investment of Rs. 5 lakhs. Therefore, at the outset, decide on your target total investment value in the unlisted space over one year. Divide that amount into five equal parts and deploy each part according to the stock recommendations. Immediately after subscribing to the service, you will not receive five investment options; the allocation process may take six to twelve months or longer to complete.
Yes, NRIs are permitted to make non-repatriation investments in unlisted shares in India. However, they can also purchase shares on a repatriation basis; however, they must notify the RBI of the transaction. FEMA regulation is also applicable just like other transactions. Simply putting, NRIs can invest in unlisted shares from NRO account without much hassles. Kindly consult with your tax advisor for details.
Subscription Process & Details
Subscription Process & Details
To subscribe “Unlisted Stock Recommendation” service, you need to transfer the fund directly to our bank account or UPI-id as follows-
HDFC Bank
Account Name - Paul Asset Consultant Private Limited
Current Account- 59209143537637
IFSC- HDFC0002058
Branch - Rajarhat Gopalpur, Kolkata - 700156
UPI id- paul.7637@waicici
GSTIN - 19AAECN6561G1Z8
PAN - AAECN6561G
*Business to business (B2B) payment can deduct TDS (subject to sharing TDS challan) & can also avail GST input credit. The GST invoice will be shared once the payment is received.
Subscription Fees -
Rs. 39,000/year (GST included) (Introductory offer only for existing clients. This service is currently available exclusively to
our existing clients. We plan to open it to the public in the coming weeks, at which point the fees will increase slightly.) Please note that NO discounts are available, as our aim is to discourage small investors from subscribing due to associated risk. If the subscription fee is beyond what your portfolio can comfortably support, this service may not be suitable for you. In such cases, we kindly ask that you refrain from subscribing.
Kindly note, you will receive unlisted stock recommendation & research note with the subscription fees of Rs.39,000/year. No shares will be credited post subscription fees payment. You may or may not purchase shares as per your own discretion separately.
Post Subscription
- After fund transfer, make sure to share payment receipt only to our email info@paulasset.com with Subject Line – “Subscription Fees Payment for Unlisted Stock Recommendation – (your full name)”. If you require GST invoice, kindly write down your Business name, address & GST details on the same email.
- Within 2 working days from the receipt of fund, we will share the research note & stock recommendations with details on how to purchase.
- Afterwards, you can place share purchase request as per your discretion.
- Currently website access is not available. Once we launch the service for public then you will get website after login access.
Current Buying Opportunity (Open Recommendation)
After subscribing within the next 2 working days, you will receive the following investment opportunities:
The company manufactures import-substitute products in a sunrise sector. Massive foreign investments and the PLI scheme have already been announced. The management is targeting a growth of 10-12 times within the next 3-4 years. Even if they achieve 50% of their target, significant wealth can be unlocked.
Both belong to a sector where nearly every player has more than doubled their revenue and capacity in FY23 and FY24, with an even better outlook for FY25 and FY26. The combined capacity of all players is expected to increase by more than threefold by FY27. Many major players in this sector are currently unlisted but plan to go public within 1-2 years, creating a golden opportunity for wealth creation in the unlisted space.
is nearing the finalization of its IPO plan by the end of 2024, so this opportunity may not be available for long.
An undisputed market leader with a significant entry barrier, this business is growing at a healthy pace, supported by a strong balance sheet and free cash flow. There is minimal risk of losing market leadership in the coming 2-3 years or more due to the high entry barriers imposed by regulatory bodies.