Unlisted firms outpace listed peers with faster revenue, earnings growth

Unlisted companies are outpacing their listed counterparts, with faster revenue and earnings growth. According to data from the Centre for Monitoring Indian Economy (CMIE), unlisted firms recorded sales growth of 8.34 per cent in the financial year 2023-24, compared to just 1.69 per cent for listed companies. 

 

The findings are based on a sample of 4,231 unlisted companies (excluding financial firms), compared with 3,575 listed non-financial companies. Although data for unlisted firms typically lags behind, the December-end sample covers about a quarter of the unlisted companies in the CMIE database, often reflecting trends among larger, better-managed firms. 

 

A key driver of this growth were unlisted manufacturing companies, which witnessed a sales increase of 7.62 per cent vis à vis a modest 0.65 per cent for their listed peers. Other sectors, including consumer goods, metals, and automobiles, also contributed to the unlisted sector’s outperformance. 

 

The agility of unlisted firms, combined with fewer regulatory constraints, according to experts, has given them an edge in responding to market shifts. “You may have more flexibility in decision-making (as an unlisted company)… You have greater adaptability to market challenges,” explained Dhiraj Sachdev, chief investment officer at Roha Venture, a fund that invests in both listed and unlisted companies. 

 

Unlisted startups use innovative technologies and often power growth by capturing market share faster than traditional businesses. Private equity funding has become more common and these asset managers often push for aggressive growth, said Sachdev.

 

Nipun Mehta, founder and CEO of multifamily office BlueOcean Capital Advisors, pointed to improved funding conditions that have further boosted unlisted firms. A surge in the stock market typically boosts confidence in the unlisted space, too, he said. 

 

“In the unlisted market volumes were low and profits for investors were uncertain because exits were a question mark,” he said, adding the family offices he handles have seen a higher portfolio share for unlisted companies because of increased visibility for an exit.

 

While some sectors have faced challenges in both listed and unlisted spaces — such as mining and textiles — unlisted firms have displayed greater resilience in these sectors as well. 

 

Notable examples of unlisted companies outperforming their listed peers include Nayara Energy, which reported a 13.4 per cent rise in sales to Rs 1.3 trillion; Flipkart India, which grew 26.4 per cent to Rs 70,542 crore; and Apple India, whose sales soared 35.7 per cent to Rs 66,727.7 crore, according to Capitaline data. 

 

In aggregate, unlisted companies saw profits grow by 29 per cent in FY24, a significant improvement on the 13 per cent growth recorded in the previous year and notably higher than their listed counterparts. 

 

Listed companies had outperformed unlisted players on sales growth over the previous couple of years (FY22 and FY23). The numbers for FY24 reflect a reversal of the same.