A sharp correction has gripped India’s unlisted equity market over the past few weeks, with shares of marquee IPO-bound firms like the National Stock Exchange (NSE), National Securities Depository Ltd (NSDL), and Tata Capital and others sliding as much as 21% from their recent peaks.
The selling pressure has intensified in the wake of HDB Financial Services’ steeply discounted IPO and a regulatory clampdown on global trading firm Jane Street, which has cast a fresh shadow over the outlook for India’s derivatives market and dampened sentiment across the unlisted market counters.
HDB’s discounted IPO upends sentiment
The Rs 12,500-crore IPO of HDB Financial Services, priced at Rs 740 per share, nearly 40% below its grey market value of Rs 1,225 as of June 18, has been a watershed moment for India’s unlisted equity ecosystem. The stock, which listed at Rs 835 and hovered at Rs 845 on Friday, delivered no meaningful upside for those who entered the market early at inflated prices.
“HDB Financial’s IPO was priced at Rs 740, sharply below its grey market valuation of Rs 1,250–Rs 1,300. The 40%+ discount has surprised many investors,” said Gaurav Garg from Lemonn Markets. “However, the valuation, implying a price-to-book of ~3.7x, is largely in line with listed NBFC peers like Shriram Finance (P/B ~2.4x) and well below Bajaj Finance (P/B ~6.3x).”
“As one investment banker noted, ‘We have no influence on what is happening on the unlisted side.’ In that light, the IPO price is not a case of underpricing, but rather a reflection of realistic, market-aligned valuation,” Garg added.
Sunny Agrawal, Head of Fundamental Equity Research at SBI Securities, said “the HDB IPO at Rs 740 vs Rs 1,250 grey market signals a necessary valuation reset in the unlisted space. Rising NPAs from MSME stress and slowdown in auto over recent quarters likely influenced pricing discipline, bringing expectations closer to listed market realities.”
The deep discount in HDB Financial’s IPO pricing signals more than just a one-off mispricing, said Anirudh Garg, Partner and Fund Manager at INVasset PMS, adding that "it reflects a broader recalibration in unlisted valuations driven by a divergence between private market optimism and listed market discipline."
NSDL shares drop
NSDL shares, which were trading at around Rs 1,275 in June, have declined to around Rs 1,025, a near 20-21% fall, after Securities and Exchange Board of India (Sebi) extended its IPO listing deadline from April 2024 to July 2025. The move dampened investor sentiment further, following the HDB debacle.
“The 21% correction in NSDL was partly driven by the Sebi nominee rule extension, with additional pressure from HDB’s weak listing and sentiment spillover from the NSE–Jane Street developments,” said Agrawal.
Garg from Lemonn Markets noted, “NSDL’s fundamentals remain intact, with a trailing P/E of ~60x, still reasonable compared to listed peer CDSL (~70x). The correction, therefore, appears more rooted in market psychology and the recalibration of IPO expectations than in company-specific risk.”
Anirudh Garg pointed to the grey market’s sensitivity to exit timelines. “Investors in the unlisted space often anchor to a near-term liquidity event; once that timeline extends, enthusiasm deflates… The correction is equally a reflection of investors repricing duration risk and resetting expectations for exits,” he said.
NSE: Jane Street curbs add to the drag
The unlisted shares of NSE, India’s dominant exchange in equity derivatives, have declined nearly 10% from their recent high of Rs 2,400, with traders growing cautious after the Sebi barred U.S.-based Jane Street from local markets. Sebi accused the global trading firm of misleading retail participants through index manipulation, a charge Jane Street has denied.
The episode has stoked fears that Sebi could tighten trading rules, leading to lower volumes in derivatives, the segment that generates nearly two-thirds of NSE’s Rs 171 billion in revenue. The sell-off in NSE’s unlisted stock mirrors a 12% decline in the listed shares of BSE Ltd, and a drop in other Indian capital market firms.
“The correction in NSDL was partly driven by… sentiment spillover from the NSE–Jane Street developments,” said Sunny Agrawal of SBI Securities.
The Jane Street curbs came just as NSE was gaining momentum for a long-awaited IPO. Its shares had rallied in the unlisted market to Rs 2,400 after it moved to settle a regulatory case that had derailed its listing plan since 2016. At that level, NSE’s valuation of about $69 billion had surpassed global peers like Deutsche Boerse AG and Nasdaq Inc, according to a Bloomberg report.
Tata Capital rights issue fuels valuation reset
Tata Capital’s announcement of a rights issue at Rs 343, far below its unlisted market price of Rs 1,075, has added to concerns. The steep 64% discount came as a jolt to investors who had assumed the stock would list near prevailing private market valuations.
Agrawal said that “Tata Capital’s rights issue at Rs 343 vs Rs 1,075 reflects moderation in exuberance. The rights pricing indicates a move towards fairer value zones after an overvalued phase.”
Gaurav Garg pointed out that the unlisted market implied a P/E of over 100x and a P/B of ~18x for Tata Capital, compared to Bajaj Finance’s P/E of ~34x and P/B of ~5.9x. “The discounted rights issue was a deliberate effort to cool overheated valuations ahead of IPO plans,” he said.
“A PE multiple of 100x on unlisted trades was already signalling froth… The rights issue at just Rs 343 suggests that even the parent isn’t willing to validate such lofty valuations,” Anirudh Garg said.
Broader unlisted market reset underway
Other IPO-bound firms have also taken a hit. Vikram Solar’s shares are down 21% to Rs 375, while Hero Fincorp fell 9% to Rs 1,595. Gaurav Garg observed that Hero Fincorp and Vikram Solar were trading at trailing P/Es of ~185x and ~149x, respectively—multiples that are “exceptionally high for the current environment.”
“These are not isolated events. Analysts believe we are in the early stages of a broader valuation reset,” he said. “The grey market has already responded with notable corrections… Sentiment is shifting from FOMO-driven buying to cautious revaluation.”
Anirudh Garg echoed the sentiment and said “valuation compression is not just probable—it’s necessary. These levels reflect exuberance from a time when liquidity was abundant and exits seemed imminent.”
“The recent correction appears more structural than cyclical. It marks a shift from speculative pricing toward fundamentals-led valuation,” said Garg.
The road ahead
“Euphoria in unlisted markets in terms of valuations seems to be waning… Investors should be watchful of valuations and growth potential before buying stocks in unlisted markets,” said Sunny Agrawal, summing up the broader shift.
While some companies may continue to command a premium, analysts say the unlisted space is transitioning from scarcity-led pricing to one where public market benchmarks increasingly anchor expectations.
“Eventually, pricing will stabilize at more rational levels, separating structurally strong businesses from hype-driven plays,” said Anirudh Garg. Until then, the correction in NSE, NSDL and others is likely to keep investors cautious.
Also read | NSDL IPO set to open soon: Unlisted share price down 20% from peak. Here are 7 things to watch out for
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
The selling pressure has intensified in the wake of HDB Financial Services’ steeply discounted IPO and a regulatory clampdown on global trading firm Jane Street, which has cast a fresh shadow over the outlook for India’s derivatives market and dampened sentiment across the unlisted market counters.
HDB’s discounted IPO upends sentiment
The Rs 12,500-crore IPO of HDB Financial Services, priced at Rs 740 per share, nearly 40% below its grey market value of Rs 1,225 as of June 18, has been a watershed moment for India’s unlisted equity ecosystem. The stock, which listed at Rs 835 and hovered at Rs 845 on Friday, delivered no meaningful upside for those who entered the market early at inflated prices.
“HDB Financial’s IPO was priced at Rs 740, sharply below its grey market valuation of Rs 1,250–Rs 1,300. The 40%+ discount has surprised many investors,” said Gaurav Garg from Lemonn Markets. “However, the valuation, implying a price-to-book of ~3.7x, is largely in line with listed NBFC peers like Shriram Finance (P/B ~2.4x) and well below Bajaj Finance (P/B ~6.3x).”
“As one investment banker noted, ‘We have no influence on what is happening on the unlisted side.’ In that light, the IPO price is not a case of underpricing, but rather a reflection of realistic, market-aligned valuation,” Garg added.
Sunny Agrawal, Head of Fundamental Equity Research at SBI Securities, said “the HDB IPO at Rs 740 vs Rs 1,250 grey market signals a necessary valuation reset in the unlisted space. Rising NPAs from MSME stress and slowdown in auto over recent quarters likely influenced pricing discipline, bringing expectations closer to listed market realities.”
The deep discount in HDB Financial’s IPO pricing signals more than just a one-off mispricing, said Anirudh Garg, Partner and Fund Manager at INVasset PMS, adding that "it reflects a broader recalibration in unlisted valuations driven by a divergence between private market optimism and listed market discipline."
NSDL shares drop
NSDL shares, which were trading at around Rs 1,275 in June, have declined to around Rs 1,025, a near 20-21% fall, after Securities and Exchange Board of India (Sebi) extended its IPO listing deadline from April 2024 to July 2025. The move dampened investor sentiment further, following the HDB debacle.
“The 21% correction in NSDL was partly driven by the Sebi nominee rule extension, with additional pressure from HDB’s weak listing and sentiment spillover from the NSE–Jane Street developments,” said Agrawal.
Garg from Lemonn Markets noted, “NSDL’s fundamentals remain intact, with a trailing P/E of ~60x, still reasonable compared to listed peer CDSL (~70x). The correction, therefore, appears more rooted in market psychology and the recalibration of IPO expectations than in company-specific risk.”
Anirudh Garg pointed to the grey market’s sensitivity to exit timelines. “Investors in the unlisted space often anchor to a near-term liquidity event; once that timeline extends, enthusiasm deflates… The correction is equally a reflection of investors repricing duration risk and resetting expectations for exits,” he said.
NSE: Jane Street curbs add to the drag
The unlisted shares of NSE, India’s dominant exchange in equity derivatives, have declined nearly 10% from their recent high of Rs 2,400, with traders growing cautious after the Sebi barred U.S.-based Jane Street from local markets. Sebi accused the global trading firm of misleading retail participants through index manipulation, a charge Jane Street has denied.
The episode has stoked fears that Sebi could tighten trading rules, leading to lower volumes in derivatives, the segment that generates nearly two-thirds of NSE’s Rs 171 billion in revenue. The sell-off in NSE’s unlisted stock mirrors a 12% decline in the listed shares of BSE Ltd, and a drop in other Indian capital market firms.
“The correction in NSDL was partly driven by… sentiment spillover from the NSE–Jane Street developments,” said Sunny Agrawal of SBI Securities.
The Jane Street curbs came just as NSE was gaining momentum for a long-awaited IPO. Its shares had rallied in the unlisted market to Rs 2,400 after it moved to settle a regulatory case that had derailed its listing plan since 2016. At that level, NSE’s valuation of about $69 billion had surpassed global peers like Deutsche Boerse AG and Nasdaq Inc, according to a Bloomberg report.
Tata Capital rights issue fuels valuation reset
Tata Capital’s announcement of a rights issue at Rs 343, far below its unlisted market price of Rs 1,075, has added to concerns. The steep 64% discount came as a jolt to investors who had assumed the stock would list near prevailing private market valuations.
Agrawal said that “Tata Capital’s rights issue at Rs 343 vs Rs 1,075 reflects moderation in exuberance. The rights pricing indicates a move towards fairer value zones after an overvalued phase.”
Gaurav Garg pointed out that the unlisted market implied a P/E of over 100x and a P/B of ~18x for Tata Capital, compared to Bajaj Finance’s P/E of ~34x and P/B of ~5.9x. “The discounted rights issue was a deliberate effort to cool overheated valuations ahead of IPO plans,” he said.
“A PE multiple of 100x on unlisted trades was already signalling froth… The rights issue at just Rs 343 suggests that even the parent isn’t willing to validate such lofty valuations,” Anirudh Garg said.
Broader unlisted market reset underway
Other IPO-bound firms have also taken a hit. Vikram Solar’s shares are down 21% to Rs 375, while Hero Fincorp fell 9% to Rs 1,595. Gaurav Garg observed that Hero Fincorp and Vikram Solar were trading at trailing P/Es of ~185x and ~149x, respectively—multiples that are “exceptionally high for the current environment.”
“These are not isolated events. Analysts believe we are in the early stages of a broader valuation reset,” he said. “The grey market has already responded with notable corrections… Sentiment is shifting from FOMO-driven buying to cautious revaluation.”
Anirudh Garg echoed the sentiment and said “valuation compression is not just probable—it’s necessary. These levels reflect exuberance from a time when liquidity was abundant and exits seemed imminent.”
“The recent correction appears more structural than cyclical. It marks a shift from speculative pricing toward fundamentals-led valuation,” said Garg.
The road ahead
“Euphoria in unlisted markets in terms of valuations seems to be waning… Investors should be watchful of valuations and growth potential before buying stocks in unlisted markets,” said Sunny Agrawal, summing up the broader shift.
While some companies may continue to command a premium, analysts say the unlisted space is transitioning from scarcity-led pricing to one where public market benchmarks increasingly anchor expectations.
“Eventually, pricing will stabilize at more rational levels, separating structurally strong businesses from hype-driven plays,” said Anirudh Garg. Until then, the correction in NSE, NSDL and others is likely to keep investors cautious.
Also read | NSDL IPO set to open soon: Unlisted share price down 20% from peak. Here are 7 things to watch out for
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
