How to Value Unlisted Shares: A Practical 2026 Framework for Indian Investors

Reviewed by Kanishk Dev Bangia, NISM Series XV Certified Research Analyst

Last Updated: June 2026 | Reg. No: NISM-202300182946

When valuing a listed stock, one can always start off with the current market price of the security. In case of an unlisted stock, however, there is no starting point. There is no trading taking place at all times on some exchange where one can get an actual price and then react accordingly. This is precisely the reason why so many investors get into trouble the first time someone suggests to them the price of an unlisted stock.

This guide provides a systematic approach to thinking about the valuation of an unlisted stock. It does not provide you with any magic formula for determining its value (there is none). However, it does give you the benchmarks that professionals use.

First, accept what “value” means here

In the unlisted market, the transaction price is simply what a willing buyer and a willing seller decide upon through an intermediary. There is no right or wrong price in the equation. You only create a band of reasonableness – a band you have independently derived from reference points – to assess if a quote falls within that band.

This is why the process of valuation in this market does not necessarily mean determining the "one and only" price. Rather, it involves asking yourself the following question: "Is the quoted price justified or unjustified compared to all the observable information I have?" If you're just entering into this space, be sure to familiarize yourself with unlisted shares.

Reference point 1: The last funding round

A company that has received funding from external sources would typically rely on its latest funding round as a reference point for valuation purposes. Each funding round is associated with the valuation of the company at a certain point in time.

Best practices when applying it:

• Find the post-money valuation and the approximate amount of shares to derive a price per share.

• Pay attention to the timing of the round. Two-year-old information in rapidly evolving industries doesn't really help.

• Remember that there might be investor-friendly terms like preferences, anti-dilutions, etc. in round prices, which regular equity may lack – hence the valuation of round prices would overvalue regular equity.

Round financing is a great reference point, however, it must be noted that it only reflects a snapshot of negotiations among certain parties and does not represent the true worth of an investment.

Reference point 2: Valuation multiples of listed peers

The most common multiples include:

• Price-Earnings Ratio (P/E): The ratio of listed peer's price to earnings per share.

• Price-to-Book Ratio (P/B): Helpful in valuing financial firms and asset-intensive firms.

• Enterprise Value to EBITDA: Used in comparison of earnings capacity among different firms.

The process: You need to find the multiple that listed peers trade at and then use the same on the relevant metric of the unlisted firm. For example, if listed peers trade at around 25 times P/E and the earnings of the unlisted company stand at ₹40 per share, the value implied via the peer's multiples would be ₹1,000 per share.

Two important considerations:

• Illiquidity discount. Unlisted stocks are less liquid than listed peers, and the valuation multiple for unlisted stocks is usually discounted accordingly, and often significantly. Peer implied valuations are never taken at face value.

• Comparability. Peers are always different, with growth, profitability, size, and quality differing.

Point of Reference No.3: Book value and fundamentals

The book value, or the net assets per share, serves as a bottom-up reference for a business, particularly those in the financial or asset-based sector. It is never the whole story in evaluating the worth of a growth company, which is based mainly on future earnings, not existing assets; however, at least it helps anchor your evaluation.

Combine the book value approach with the cursory analysis of fundamentals that is easily available: revenue trend, profit margin, leverage, and general sector outlook. You will never have the quarterly details a publicly listed company offers; however, just having some fundamental idea prevents valuation in a void.

Conclusion: An actionable due diligence workflow

Below is an actionable approach that will put any valuation of an unlisted security under scrutiny:

1. Establish the last funding round, if any, and use it as the implied valuation for your shares, along with its relevant dates and details.

2. Compare with listed peer valuations and apply illiquidity adjustment.

3. Validate it with the book value and an estimate of fundamental value.

4. Get at least three intermediary quotations and compare them with your anchor values.

5. Establish your own range of reasonableness and determine if the quotation makes sense and is within reason.

Such a workflow will not necessarily guarantee a good result. However, it will ensure that “Someone gave me this quotation” is replaced with “Here’s why this quotation is or is not justified.”

Frequently Asked Questions

Could an unlisted share possibly have an intrinsic value when there is no quoted price?

Not a precise number, but a justified range can be determined using funding rounds, multiples based on listed peers, book value, and intermediary opinions.

Why a discount for illiquidity?

Due to difficulty selling the shares, the price for identical assets will be lower — so any peer comparisons must be adjusted accordingly.

How many opinions to obtain? At least three. A spread between 5%-15% is normal; anything significantly wider or including a single outlier quote should raise some questions.

Is the last funding round price the fair value? Not necessarily; the price is a benchmark rather than the exact amount since it refers to a past transaction with investor-preferred terms.

Does a reasonable valuation mean that the unlisted asset is also safe to invest into? Not exactly. Valuation decreases the likelihood of paying too much but does not eliminate any risks.

Conclusion

Valuing an unlisted share is less about finding one true number and more about building a defensible range — anchoring on the last funding round, cross-checking against discounted listed-peer multiples, grounding in book value and fundamentals, and triangulating intermediary quotes. Do that, and you replace blind acceptance of a quote with a reasoned judgement. Skip it, and you’re trusting a number you can’t independently justify.

For the bigger picture, read what unlisted shares are and weigh the unlisted-versus-IPO trade-off once you’re comfortable with valuation.

Disclaimer:

This is written for educational and informational purposes only. Nothing here constitutes investment advice or a recommendation to buy or sell securities. All data is sourced from publicly available information. Investments in securities markets are subject to market risks — please read all offer documents carefully before investing.