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# How Are Unlisted Share Prices Determined in India?
When you buy a listed stock, the price comes from a live exchange order book — thousands of buyers and sellers meeting in real time. Unlisted shares have no such mechanism. There is no NSE or BSE ticker, no continuous trading, and no single official price. So where does the quote on a platform like Polemarch actually come from?
The answer is that unlisted prices are constructed, not discovered on an exchange. Dealers and platforms combine several inputs to arrive at a fair, tradeable quote. Understanding those inputs helps you judge whether a price is reasonable before you commit.
Disclaimer: This article is educational and not investment advice. Unlisted shares are illiquid and carry higher risk than listed equity. Prices mentioned are illustrative. Do your own research and consult a SEBI-registered adviser before investing.
Input 1: The Last Funding Round
The single most important anchor is the company's most recent primary funding round — the price at which the company itself last issued shares to investors.
- A funding round is a real, negotiated transaction. Venture or PE investors paid a specific per-share price after due diligence
- That price reflects a professional view of the company's worth at that moment
- It becomes the reference point around which secondary (resale) quotes are built
For example, if a company last raised at ₹500 per share in its Series D, secondary market quotes will typically sit in a band around that figure. The quote drifts up if the business has performed well since, or down if growth has stalled or the broader market has cooled.
The limitation: funding rounds happen infrequently — maybe once every 12 to 24 months. Between rounds, the anchor goes stale, and dealers lean more on the other inputs below.
Input 2: Comparable Listed Peers
When a company has no recent round, or to sanity-check the price, dealers look at comparable listed companies — public peers in the same sector with a known market price.
The logic is relative valuation:
- Take a listed peer's valuation multiple (for example, **price-to-earnings or price-to-book**)
- Apply that multiple to the unlisted company's earnings or book value
- Adjust for differences in size, growth, and quality
If listed peers in a sector trade at, say, 30x earnings, an unlisted company growing faster might justify a similar or higher multiple — while a smaller, riskier one would trade at a discount. This peer-based approach is especially useful for companies expected to IPO, where the listed comparison is the most natural reference.
Input 3: Real-Time Demand and Supply
Even without an exchange, supply and demand are very real in the unlisted market.
- Demand rises when a name is in the news — IPO buzz, strong results, or a high-profile investor entering. More buyers chasing limited stock pushes quotes up
- Supply comes from early employees exercising ESOPs, angel investors exiting, or pre-IPO sellers booking gains. A wave of sellers can soften the price
Because the float (available shares) is limited and concentrated, the unlisted market can be more sensitive to demand swings than listed equity. A single popular pre-IPO name can see its quote jump significantly on a strong demand cycle, then cool just as fast.
Input 4: The Dealer's Spread
The final piece is the dealer spread — the gap between the price a dealer will buy at (the bid) and the price they'll sell at (the ask).
- The dealer sources shares, holds inventory, and takes on the risk of price moves and liquidity
- The spread is their compensation for that risk and effort
- Thinly traded names carry wider spreads; popular, liquid pre-IPO names carry tighter ones
When you see a quote on a platform, you're usually seeing the ask — the price you pay to buy. If you wanted to sell the same share immediately, you'd receive the lower bid. On illiquid names this gap can be meaningful, so always ask what the two-way price is.
Why There's No Single "Correct" Price
Put these four inputs together and you can see why two platforms may quote different prices for the same share:
- They source from different dealers with different inventory
- They weigh the last round versus peer multiples differently
- They carry different volumes and apply different spreads
None of these quotes is "wrong" — they reflect genuine differences in cost and risk. This is exactly why comparing across two or three platforms before you transact is good practice.
How the Price Updates Over Time
Unlike a listed stock that ticks continuously, an unlisted quote repriced in steps. A name might hold steady for days or weeks, then move sharply when:
- A new funding round resets the anchor
- Quarterly or annual results come out
- Listed peers rally or fall hard
- IPO news (a DRHP filing, an approval) hits
This stepwise behaviour is normal. It does not mean the share is more stable than a listed one — it simply means price discovery is lumpier and less frequent.
What This Means For You as a Buyer
- Check the last funding round price — it's the most defensible anchor. Treat quotes far above it with caution
- Compare across platforms — a 5 to 15 percent gap is common; a much larger gap deserves questions
- Understand the spread — the price you can sell at is lower than the price you buy at
- Don't expect daily liquidity — you may not be able to exit at the quoted price on demand
Unlisted price formation rewards patient, informed buyers. Knowing how the quote is built is the first step to not overpaying.
*Published by the Polemarch editorial team. Not investment advice — prices are illustrative and subject to change.*