Understanding Unlisted Share Valuation:
Unlisted share market in India is opening doors to a vast new opportunity set for investors, especially in the pre-IPO space. These can provide spectacular returns; however, without a public market price, it becomes imperative to put a money value on a company.
At Unlisted Avenue, we simplify this process so that you are empowered to make confident investment decisions.
Why Does Valuation Matter in Unlisted Shares Investing?
Though knowing how to value unlisted shares will help you:
Pay less for the shares
Identify underrated opportunities
Compare companies across sectors
Negotiate better deals in private deal
Common Methods of Valuation of Unlisted Share
Net Asset Value (NAV) Method:
Asset-intensive companies in industries like manufacturing or real estate.
Formula: NAV = (Total Assets – Total Liabilities) ÷ Number of Shares
Example: If the company has an asset base of ₹100 crore and a liability of ₹30 crore, NAV = ₹70 crore.
Discounted Cash Flow (DCF) Method:
High-growth companies with reasonably predictable cash flows.
DCF projects future cash flows and discounts these at a discount rate to determine present value, which is best for growth-focused valuation.
Comparable Company Analysis (CCA) Method:
Comparing with similar listed companies.
Utilizes valuation multiples obtained from comparable companies to determine fair value.
Price-to-Earnings (P/E) Ratio Method:
A profit-making company.
Values a company based on its EPS × Industry P/E multiple.
Book Value Method:
Conservative baseline valuations. This method calculates the net worth of a company per share from its balance sheet-an element that does not take into account potential growth but rather acts as that basic level of safety.
Factors Influencing Unlisted Shares Valuation
Revenue growth
Profit margin
Level of debt
Sector-wise performance
Management quality
Regulatory changes
How Unlisted Avenue Adds Value?
With Unlisted Avenue, you obtain:
Latest unlisted share prices for the leading companies
Company profiles & sector analysis at a deep level
Valuation by way of multiple methods
Safe, verified unlisted shares transactions.
Conclusion
Grasping the valuation of unlisted shares can help you recognize opportunities in their early stages and enable smarter investment decisions within the unlisted market.
Kick-start your journey at Unlisted Avenue and make informed, profitable investment decisions.