June 2024 - VNN Wealth

India is the world’s 5th largest economy with a GDP of $3.9 trillion and will reach $5.1 trillion in 2027. (Source). By 2030, India is likely to surpass Japan and Germany to become the world’s 3rd largest economy. Evidently, the Indian economy is rapidly growing and so are the investment opportunities. While Indians are benefiting from these opportunities, NRIs (non-resident Indians) are not left behind. There’s a wide spectrum of investment options in India for NRIs. NRIs can comfortably invest in Indian markets and diversify their portfolio. Here’s everything you need to know.

How can NRIs Invest in Indian Markets?

Non-resident Indians (NRIs) can invest in Indian markets by creating a Non-Resident Ordinary (NRO) or Non-Resident External (NRE) bank account. Having either of these accounts is mandatory to be able to transact in Indian currency.

Experts at VNN Wealth will guide you through the entire procedure, including KYC, after which you can start investing in the following options.

top investment options for NRIs in India

Read in detail below👇

Smart Investment Options in India for NRIs

1. Mutual Funds

Mutual funds offer instant diversification to your investment portfolio. NRIs can invest in mutual funds via SIP or lumpsum, based on their financial goals and risk appetite. You can choose from equity mutual funds, debt funds, or hybrid mutual funds to balance risk-reward.

Equity funds are ideal for long-term investments. Debt funds offer a range of categories from short to long-term investments. Hybrid funds offer the best of both worlds. The rate of return on mutual funds depends upon the fund type and market movement.

Get in touch with experts at VNN Wealth for further guidance.

Note: Some Asset Management Companies (AMCs) may restrict NRIs from USA and Canada.

2. Alternative Investment Funds (AIF)

Alternative Investment Funds offer non-conventional investment options. NRIs can expand their portfolio beyond mutual funds by investing in AIF. AIFs have three categories: CAT I, CAT II, and CAT III. Each category provides diverse investment avenues such as private equity, venture capital, hedge funds, angel funds, etc. AIF CAT III is more popular among investors. You can contact VNN Wealth and our experts will walk you through the procedure.

3. Unlisted Shares (Pre-IPO Stocks)

Unlisted shares are gaining popularity among investors. NRIs can also buy shares of a company that hasn’t been listed yet. Unlisted stocks are traded off the market (Over-the-counter market). Therefore, it can be tricky to identify promising stocks.

VNN Wealth has handpicked unlisted shares with a good track record. These stocks are less volatile compared to the listed stocks as they’re not frequently traded.

Investing in unlisted shares unlocks the following benefits:
1. Guaranteed allocation if the company goes live on the stock exchange via IPO.
2. Pre-listing gains right before the company goes live.

NRIs can consider parking some of their funds in these shares to further diversify their portfolio.

4. Fixed Deposits

The good old FD is always worth looking into. While the return may not be as superior as the avenues listed above, it’s safe and can accumulate wealth over a period of time. NRIs prioritizing safer investments along with steady interest income can consider fixed deposits.

Here are three ways NRIs can create an FD:

1. Non-Resident Ordinary (NRO) Fixed Deposit allows you to invest your Indian income such as rental income, dividends, pension, etc.

2. Non-Resident External (NRE) Fixed Deposit converts your foreign currency into Indian currency to invest.

3. Foreign Currency Non-Resident (Banks) Fixed Deposit is a term deposit account. You can maintain and invest funds by transferring from your NRE account.

5. Portfolio Management Service (PMS)

Portfolio Management Service (PMS) provides tailor-made investments for HNIs. NRIs seeking personalized investments can also opt for PMS. A dedicated portfolio manager makes decisions on your behalf to optimize your investments & maximize returns. The minimum investment requirement for PMS is INR. 50,00,000. You will have to transfer the entire amount to the PMS house. Or, you can transfer your existing portfolio to the PMS house. If your portfolio is worth less than INR. 50 lakhs, you can invest the remaining funds by transferring the amount.

PMS helps you keep track of your stock, ESOP, and other asset holdings. The portfolio manager leverages market opportunities to deliver superior returns on your investments. You can directly communicate with the portfolio manager to gain insights. Read more about when is the right time to opt for PMS.

Taxation for NRIs

Taxation is an important factor to consider while investing. Tax rules for NRIs are similar to the Indian residents with slight exceptions.

The tax implications will depend upon the investment avenue and the investment horizon. The most important thing is to avoid double taxation. Make sure your country of residence has a Double Taxation Avoidance Treaty (DTAA) with India. You must also file The Foreign Account Tax Compliance Act (FATCA) self-declaration.

Also read- Mutual fund taxation for NRIs in India.

How Can NRIs Benefit From Investing in India?

1. NRIs with funds lying idle in India can invest without moving funds out of India. This will generate steady income for themselves or dependant parents in India.

2. NRIs returning with foreign assets can explore investment opportunities in Indian markets to amplify wealth.

3. NRIs planning to return to India after retirement can build a solid retirement plan by investing funds in various assets

Final Thoughts

India is likely to overtake Japan and Germany to become the 3rd-largest economy in the world. Sectors like Auto, Cement, Telecom, Financials, etc will significantly contribute to the growth. NRIs can explore plenty of investment options in India across various sectors and expand their portfolio.

A wide range of investment instruments, such as mutual funds, AIFs, unlisted shares, and FDs, are easily accessible. Savvy Non-resident Indian investors can also opt for Unlisted Shares/Pre-IPO to help generate that extra alpha on their portfolio. Make sure you evaluate your risk appetite and align your investments with your financial goals.

For more insights and guidance, contact VNN Wealth, and our experts will streamline your investments.

Unlisted shares in India have become popular over the past few years. Investors are buying unlisted shares of emerging companies showing potential growth as the awareness around them has increased.

By investing in these shares Pre-IPO, you gain returns in two ways.

1. Prices of these shares may go up in the long run via over-the-counter trading.

2. You may bag pre-listing/ listing gains.

We’re receiving more inquiries about unlisted shares than ever before, especially after the Tata Tech IPO’s massive success. Tata Technologies was our second success story after Nazara Technologies in terms of entry and exit for our investors. And now, more unlisted companies have entered our top picks.

Interested to know which unlisted share to buy?

Our team of experts has curated a list of the top 7 unlisted shares in India.

But before we dive into it, read everything about unlisted shares here.

Top 7 Picks of Unlisted Shares in India

1. Waaree Energies Unlisted Shares

The leading renewable energy company in India, Waaree Energies Ltd manufactures solar PV modules and offers solar energy solutions. Waaree’s manufacturing facility of 12GW is among the largest in India. It started with 2GW in 2021, upgraded to 9GW in March 2023, and rapidly expanded to 12 GW in June 2023. Waaree’s four manufacturing units are located in Surat, Tumb, Nandigram, and Chikhli- collectively across 136.30 acres. The company manufactures a wide range of products such as solar panels, solar water pumps, solar street lights, and solar inverters, to name a few. The company also offers Solar EPC services along with project development, financing, operations, maintenance, and asset management.

Waaree witnessed an incredible revenue boost from 1997cr in 2021, 2950cr in 2022, to 6840cr in 2023. The operating profit margins have also increased from 4.35 in 2021 to 12.37 in 2023. Waaree is aiming to keep contributing towards a green future with its affordable and easily accessible solar energy.

2. Vikram Solar Unlisted Shares

Founded in 2006, Vikram Solar is one of the leading solar PV module manufacturers in India. Currently, with 3.5 GW capacity, the company also provides integrated solar energy solutions, Engineering, Procurement, and Construction (EPC) services, and operations & maintenance. Vikram Solar has 3 manufacturing units in Tamilnadu and West Bengal. The company has 42+ distributors across 600 districts in India. Vikram’s 70% of revenue comes from PV modules and about 20% from EPC services.

It is the first company to contribute to fully solarizing Kochi(Kerala) airport, installing a floating solar plant in Kolkata, and commissioning large-scale rooftop solar plants across India. The company also has sales offices in the USA and has supplied solar PV modules in 32+ countries. The company’s revenue has increased to INR. 2015 crores in fy23, an 18% boost from the fy22 revenue. Vikram Solar has filed a draft with SEBI to raise INR. 1,500 crore via initial public offering (IPO) and an offer for sale of up to 5,000,000 equity shares.

3. TATA Capital Limited Unlisted Shares

A subsidiary of TATA Sons, TATA Capital Limited is registered with RBI as a non-deposit-accepting NBFC. Along with its subsidiaries, TATA Capital offers financial services to corporate, retail, and institutional customers. The company’s product portfolio includes various types of loans, investment advisory, cleantech finance, private equity, wealth products, commercial and SME finance, leasing solutions, and TATA cards, to name a few.

In the financial year 2022, TATA Capital reported the highest profit. The company’s PAT increased from INR 1,245 crore to INR 1,801 in FY22 crore and to INR 2,975 crore in FY23. Tata Capital’s loan book grew by 28% in FY22-23 and the book value increased to 48.36 from 33.82. The RoE also increased from 15.6% to 17.3%.

4. SBI Mutual Funds Unlisted Shares

SBI Funds Management Limited is one of the most popular, largest asset management firms in India. Founded in 1987, it’s a joint venture between the State Bank of India and AMUNDI (A global fund management company.) SBI currently holds a 63% stake and the remaining 37% belongs to AMUNDI. SBI mutual funds offer a wide range of mutual fund schemes such as equity mutual funds, debt funds, hybrid mutual funds, solution-oriented schemes, and Exchange-traded funds, to name a few. The company also launched an Alternative Investment Fund (AIF) in 2015 and may launch more funds in the future.

With over 53+ mutual funds schemes, SBI mutual funds have INR 1.65 trillion assets under management (AUM) and over 12 million investors. SBI fund management has been offering international investor solutions since 1988. The company guides and manages India’s dedicated offshore funds. The company also offers Portfolio Management services catering to HNIs, large provident funds, institutions, and selective trusts.

SBIFM’s AAUM is 44% more than the next largest peer (ICICI prudential mutual fund). And has hit a 27% CAGR when the rest of the market delivered 10% over a five-year horizon. As per the recent financial reports (March 2023), SBI fund management has made a net revenue of INR 2297.27 crores.

5. NSE India Limited Unlisted Shares

Founded in 1992, the National Stock Exchange (NSE) is India’s leading stock exchange with ~1968 companies listed on it. In 1994, NSE launched electronic screen-based trading, and internet trading in 2000. NSE’s flagship index, Nifty 50, serves as a global benchmark for Indian capital markets. NSE is the world’s largest derivative exchange with 21% of the global derivative contract trading. It’s also the second-largest derivatives exchange in the world for currency futures trading. The capital market business model of NSE primarily offers trading services, exchange listing, market data feeds, indices, and technology solutions.

Its cash market offers a platform to trade equity shares, mutual funds, ETFs, REITs, Sovereign Gold bonds, government securities, T-bills, etc. The debt market offers government, corporate bonds, commercial papers, and other debt instruments. NSE also provides index management services for equity indices, hybrid indices, and customized indices for asset management companies, insurance companies, investment banks, PMS, and stock exchanges. The company has performed at a CAGR of 35% over the last three years. NSE’s FY23 revenue has reached INR 12650 Cr. with a 63.27 net profit margin.

6. Chennai Super Kings

The four times IPL winner, CSK is the only sports team in India available for the general public to invest in. CSK is one of the most popular IPL franchises with a strong brand value. The brand was founded in 2008 as an IPL cricket team representing Chennai, Tamil Nadu. It is a wholly-owned subsidiary of India Cements. Being a popular IPL franchise, CSK became the country’s first sports unicorn. The brand’s market cap was raised to 7600 crores (more than 1 billion) with the share prices in the unlisted market trading between Rs. 210-225.

Chennai Super Kings generates revenues from various sources such as- Gate ticket collection, In-Stadium Advertisements, and Merchandise sales. The team earns 60% of the total revenue from Media Rights, which is the highest revenue stream. The revenue from sponsorship makes up around 15-20% of total revenue followed by 10% from ticket sales. While the Pandemic had an impact on many brands, CSK managed to maintain a balance via indirect revenue streams. One of the most loved IPL teams, CSK, will continue to generate solid revenue via merchandise sales, sponsorships, portions of prize money, and digital viewership.

7. Studds

Being a global leader in two-wheeler helmet manufacturing, Studds accounts for almost one-third share of the organized two-wheeler helmet market. Studds had an opportunity to manufacture face shields and protection wear in high demand during Covid-19. Studds’s sales received another boost when The Ministry of Road Transport and Highways declared that India would only manufacture and sell BIS-certified two-wheeler helmets. Demand for two-wheeler helmets is growing rapidly post-COVID-19 as transportation has resumed. Besides, people often replace their helmets within two to three years, enabling more business for the company.

Studds is also expanding its accessories manufacturing with riding gear gloves, goggles, jackets, and safety and storage gear. Additionally, Studds also has an opportunity to dominate bicycle helmet sales. The company is operating in more than 40 countries including Europe and US. Recently, the company has doubled its manufacturing capacity in Faridabad, Haryana.

Our Previous Recommendations

Nazara Technologies: Was listed on the stock exchange on March 30, 2021, at INR 1,981, an 81% boost from the issue price of INR 1,101.

TATA Technologies: Was listed on the stock exchange on 30th November, 2023 at INR 1,200, a whopping 140% higher than the issue price of INR 500.

Kurl On: In July 2023, Kurl On’s biggest rival Sheela Foam acquired a 95% stake in the company and offered a buyback option to shareholders.

How to Invest In Unlisted Shares?

Unlisted shares are not available to invest via the established stock exchanges as they’re traded over the counter or via private platforms. If you want to buy unlisted shares of the above companies, get in touch with us anytime and our team will take care of the rest.

Invest in unlisted shares.

Ready To Invest?

Buying unlisted shares is a great strategy to diversify your investment portfolio. These shares are fairly safer than listed shares due to less volatility. And the major benefit of investing pre-IPO is the allocation confirmation. With Unlisted shares, investors have the opportunity to gain either pre-listing gains or listing gains.

Share prices of unlisted companies often boost right before the IPO. With a huge demand in the unlisted market, you can sell your shares and earn pre-listing gains. Or, you can wait until the IPO is live and get profit from listing gains. Please note that the pre-listing and listing gains are subject to market risk. To avoid any risks, we have chosen known brands with high brand value and promising futures. Get in touch with us if you are interested in buying the above shares. Experts at VNN Wealth will guide you through the process.