Tale of the Tape 

Hola Amigos!

Nifty (-0.5%) and Sensex (-0.4%) closed in the red for a second straight day. Midcaps and Smallcaps didn't fare better, ending down -0.3% each. The advance-decline ratio was in favour of the bears (3:2).

Except Real Estate (+0.7%) and Metals (+0.4%), all other sectors ended in the red. PSU Banks (-0.8%), IT (-0.8%) and FMCG (-0.6%) witnessed selling pressure.

Unlisted shares of NSE, NDSL and Hero FinCorp have fallen over the last month. Read our top story on why the unlisted market bubble is slowly popping.

Smartworks Coworking IPO kicked off today. Check out our analysis below to help you decide whether to subscribe.

Brokerage reactions. Bharat Dynamics cracked -5% after Motilal Oswal said its valuations were a bit pricey. Meanwhile, PFC was up +3% after Morgan Stanely initiated coverage; the brokerage sees a +18% upside from current levels.

Newly-listed Crizac was locked in a +10% upper circuit after Sunil Singhania’s Abakkus picked up a small stake.

Prestige Estates (+3%) was up after logging a +300% YoY growth in Q1 sales, its strongest-every quarterly performance.

Embassy Office (-2%) was down after 1.9% equity changed hands in a block deal; reports say APAC Company was the likely seller.

JTL Industries (+3%) was up after announcing a new pipe manufacturing facility with 3 lakh MTPA capacity.

Market
Enter At Your Own Risk!

India’s unlisted share market is having a bit of a meltdown! Tbh, it’s been a long time coming. But for those of you wondering WTF an unlisted share is, or were looking to dabble in them yourself, here’s why you need to be careful.

Market 101: For a lot of popular companies that aren’t publicly listed, it's still possible to buy their shares. Promoters offer some shares to different kinds of investors and they end up selling it over the years to different people. This creates a market for unlisted shares. PS - it is unregulated though and liquidity obviously sucks. There is also no ‘invisible hand of the market’ to keep share prices in check.

What’s the deal: Normally, this isn’t a problem. Ace investors like Vijay Kedia or Madusudan Kela take long-term bets and it works for them. The issue starts when you have IPO-crazy retail investors looking to make a quick buck. The logic here was simple --  if IPO listings were sure-shot returns in 2022-23, you could buy unlisted shares months before an IPO and make EVEN more money! 

Implosion time: The problem is that rampant buying + speculation doesn’t lead to actual returns when the stock is actually listed! Take two ugly examples. When HDB Financial announced its IPO, the company said its issue price would be Rs 740 p/sh. That was a whopping 40% discount to the prevailing unlisted market price of Rs 1,250 p/sh. Ditto with Swiggy; its IPO price was Rs 390 p/sh even though a couple months before that, it was trading at Rs 500 p/sh on the unlisted market.

Ripple time: With retail investors realising that unlisted shares aren’t free money, that market is seeing a huge sell-off. Multiple IPO-ready companies have taken a hit over the last month, including NDSL (-20%), Tata Capital (-14%) and Vikram Solar (-21%). 

TL;DR: Don’t think of unlisted shares as a golden ticket. Experts say the trick is to take a long-term view.