Last Updated:June 27, 2025, 14:50 IST
Zerodha founder Nithin Kamath cautioned about how investing in unlisted shares may appear lucrative, but it comes with significant risks
Zerodha’s Nithin Kamath
Zerodha founder Nithin Kamath cautioned about how investing in unlisted shares may appear lucrative, but it comes with significant risks. His warning follows sharp losses suffered by pre-IPO investors of HDB Financial Services, who had expected substantial listing gains.
“Most investors believe they can earn easy money by buying into pre-IPO companies and booking profits after listing. But it’s far from straightforward and carries many risks,” Kamath said in a post on the social media platform X.
Big Setbacks for Pre-IPO Investors
HDB Financial’s IPO was priced at Rs 740, down 40 per cent from its unlisted market value of Rs 1,225 before the price band was announced. Compared to its earlier peak of Rs 1,550, some pre-IPO investors are staring at losses as steep as 52 per cent. A similar story played out with Swiggy, whose unlisted shares traded above Rs 500 before its IPO but now hover around Rs 400.
Despite such losses, retail interest in unlisted stocks remains strong. Popular names like NSE, Chennai Super Kings, and Metropolitan Stock Exchange of India (MSEI) have seen unlisted prices jump 87.5 per cent, 12 per cent, and 525 per cent, respectively, over the past year.
Calling the craze “crazy,” Kamath shared a personal anecdote where a wealth manager approached him to buy one of his unlisted companies to flip it for a 50 per cent markup.
Liquidity, Delays & Lack of Oversight
Highlighting the downsides, Kamath noted that unlisted shares lack liquidity and transparency. For instance, even if a company does go public, there’s no guarantee of listing gains—sometimes, the IPO price can be lower than what investors paid, as seen in HDB Financial’s case.
Using the National Stock Exchange (NSE) as an example, Kamath pointed out that companies can delay their IPOs indefinitely—NSE has been awaiting SEBI approval for years, leaving investors stuck.
Moreover, unlisted companies disclose less information than listed peers, and there’s no formal price discovery mechanism. Kamath warned that commissions and markups in this space are excessive and that the platforms facilitating such trades remain unregulated.
Avoid chasing quick money in unlisted shares. “You are better off investing in mutual funds than trying to pick unlisted companies,” Kamath said.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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