SME IPO

SME IPO, or Small and Medium Enterprises Initial Public Offering, is a significant event for emerging businesses in India. It’s a process where an SME decides to go public, allowing common people to buy shares in the company. This marks a significant growth stage, allowing the company to raise funds from the general public instead of relying on traditional methods like loans or private investments.

Through an SME IPO, the company offers a portion of its ownership to the investors in the form of shares, and the funds raised are typically used for business expansion, reducing debt, or other strategic goals. It brings more transparency and credibility to the company as it needs to comply with regulations laid down by the stock exchange and market regulators.

Investing in an SME IPO can be a profitable opportunity but also comes with certain risks, as the smaller size of the company can mean higher volatility in stock price. However, it plays a vital role in India’s economic growth by supporting smaller businesses to flourish and innovate. It is a step towards fulfilling entrepreneurial dreams and contributing to the nation’s development.

What is SME IPO?

SME IPO stands for Small and Medium Enterprises Initial Public Offering. In simpler terms, it is a way for small and medium-sized companies to raise money by listing their shares on the stock exchange, allowing the public to invest in their business.

Unlike traditional IPOs of large companies, the eligibility criteria and regulations for SME IPOs are relaxed, making the process simpler and less expensive. SMEs can use the funds raised through IPOs for business expansion, new projects, and working capital requirements.

However, due to low liquidity and smaller scale of operations, SME IPOs are considered riskier investments compared to larger IPOs. It’s important to thoroughly research the SME’s financials, track record, management team, market competition, and growth prospects before investing in an SME IPO.

SME IPO Historical List 2023

 Issue  Price   
Date IPO NameIssue Size
(in crores) 
Listing
Date 
Listing CloseListing
Gains(%) 
CMPCurrent
Gains (%) 
07-08-23Khazanchi Jewel96.7407-08-23149.406.71144.503.21
04-08-23Innovatus Ent7.7404-08-2348.96-2.0843.02-13.96
26-07-23Asarfi Hospital26.9426-07-23103.7499.5117.00125.00
21-07-23Ahasolar Tech021-07-23213.1535.76431.30174.71
19-07-23Kaka Industries21.2319-07-23115.715150.0036.12
19-07-23Acceleratebs In5.6919-07-23114.975126.0015.07
05-07-23Veefin Solution46.7305-07-2390.2210.02167.15103.84
30-06-23Cosmic CRF60.1330-06-23238.65-27.68236.00-28.48
23-06-23BIZOTIC42.2123-06-23171.00-2.2949.00-72.00
19-06-23Sonalis Consume2.8319-06-2339.903330.000.00
13-06-23Comrade12.313-06-2391.3569.17115.50113.89
12-06-23CFF85.812-06-23183.7511.36383.00132.12
05-06-23Hemant Surgical24.8405-06-23179.5599.5248.00175.56
11-05-23Innokaiz India21.1711-05-23155.6199.5148.0089.74
03-05-23Retina Paints11.103-05-2330.501.6748.8062.67
18-04-23Sancode Tech5.1518-04-2360.8029.3661.0029.79
17-04-23Exhicon Events21.1217-04-2367.205287.85349.77
06-04-23Maiden Forgings006-04-2359.86-4.9888.9541.19
29-03-23Dev Labtech11.2229-03-2350.21-1.5559.6016.86
27-03-23Bright Outdoor55.4827-03-23152.104.18475.00225.34
23-03-23Labelkraft Tech4.7523-03-2355.791.4474.0034.55
22-03-23Sudarshan50.122-03-2369.35-573.440.60
13-03-23ITCONS8.6713-03-2349.33-3.2739.99-21.59
13-03-23Resgen28.213-03-2346.57-0.9169.9048.72
09-03-23Amanaya Venture2.7609-03-2319.10-16.9615.00-34.78
09-03-23S V J Ent.6.1209-03-2336.100.2870.8596.81
01-03-23Sealmatic India56.2401-03-23236.255568.00152.44
01-03-23Macfos23.7501-03-23174.8071.37320.00213.73
21-02-23Indong Tea13.0121-02-2321.80-16.1525.00-3.85
08-02-23Earthstahl12.9608-02-2357.7544.3855.8039.50
02-02-23Transvoy5.1102-02-2374.55576.007.04
31-01-23Dharni Capital10.7431-01-2320.251.2525.0025.00
17-01-23Eastern Logica16.9417-01-23283.5026371.0064.89
12-01-23SVS Ventures11.2412-01-2321.507.57.80-61.00
12-01-23Rex Sealing8.0912-01-23143.856.56102.00-24.44

Difference between SME IPO and Main board IPO:

  1. Mainboard IPO
  2. SME IPOs – Small and medium enterprises
SME IPOMainboard IPO
Post-issue paid up capital of SME companies should be between Rs. 1 cr – Rs. 25 cr.For mainboard IPO it is minimum Rs. 10 crore.
Application size is greater than Rs. 1 lakh for 1 lot.Ranges between Rs. 10,000 – Rs. 15,000.
IPO underwriting is mandatory (100% underwritten with Merchant Banker underwriting 15%)IPO underwriting is not mandatory (Under 50% compulsory subscription to QIB’s)
Stock exchange vets the offer documentSEBI vets the offer document
3-4 months of IPO time frame6 months of IPO time frame
Can’t sell shares individually. Need to sell the entire lot.Can sell shares individually on the secondary market.
Companies need to half-yearly report mandatorily.Companies need to Quarterly report mandatorily
Minimum No. of allottees should be 50.Minimum No. of allottees should be 1000.

Features of SME IPOs

SME IPOs have gained much popularity due to their relaxed eligibility criteria and simplified regulatory framework, making it easier for small and medium-sized enterprises to access capital markets. Some of the significant features of SME IPOs include:

Lower Entry Barriers: Unlike traditional IPOs, SME IPOs have lower entry barriers, which mean smaller companies can easily access capital markets. The minimum issue size for SMEs is Rs.10 crores, as compared to Rs. 250 crores for larger companies.

Simplified Compliance Requirements: SME IPOs have simpler compliance requirements and lower regulatory costs, making it less expensive for companies to go public. For instance, a company is required to have a minimum trading lot of Rs.1 lakh during the first year of listing, as compared to Rs.10 lakhs for large public issues.

Liquidity and Visibility: SME IPO provides visibility to a company’s brand and enhances its reputation. It also helps the company to improve its liquidity position, as the shares are freely tradable on the exchanges.

One example of a successful SME IPO is Fine Organic Industries Ltd. It raised Rs. 600 crores through its IPO and used the proceeds to repay debts and fund its expansion plans. The shares were listed at an issue price of Rs.783 and reached a high of Rs.2425 within three months of listing.

In summary, SME IPOs provide an opportunity for small and medium-sized companies to access the capital markets and raise funds for business expansion. At Franchise India, we offer a wealth of resources and guidance to ambitious entrepreneurs and investors seeking to learn more about SME IPOs and other investment opportunities. We empower our readers with the tools, knowledge, and connections they need to thrive in their entrepreneurial journey.

How to apply for SME-IPOs

Applying for an SME IPO (Small and Medium Enterprises Initial Public Offering) can be an exciting opportunity for investors. Here’s a step-by-step guide to applying for an SME IPO, through different methods:

1. Online through a Demat Account:

Step 1: Open a Demat account with a registered broker or bank.
Step 2: Check the available SME IPOs on the broker’s website or trading platform.
Step 3: Read the prospectus for understanding the business, its plans, and the associated risks.
Step 4: Fill out the online application form with the number of shares and the price bid.
Step 5: Confirm and submit the application. The amount will be blocked in your bank account.
Step 6: If allotted, the shares will be credited to your Demat account.

2. Applying through a Bank:

Step 1: Visit your bank where you have an account with ASBA (Application Supported by Blocked Amount) facility.
Step 2: Request the SME IPO application form.
Step 3: Fill in the necessary details, including Demat account information, PAN number, and investment amount.
Step 4: Submit the form to the bank.
Step 5: The bank will block the application amount in your account.
Step 6: If allotted, shares will be credited to your Demat account.

3. Applying through a Registered Broker:

Step 1: Approach a registered stockbroker.
Step 2: Discuss the available SME IPOs and choose the one you want to invest in.
Step 3: Provide necessary documentation, including PAN, Aadhar, and Demat account details.
Step 4: Fill and submit the application form.
Step 5: The broker will block the amount in your bank account.
Step 6: If allotted, shares will be credited to your Demat account.

Each method has its convenience and may depend on your preferences and accessibility to the required resources. Always read the IPO prospectus and consult with a financial advisor if needed to understand the investment’s risks and rewards.

How does SME IPO listing work?

SEBI, the market regulator in India, has set specific rules for the listing of SME IPOs, or Small and Medium Enterprises Initial Public Offerings, that are distinct from regular IPO listings. Here’s a simple breakdown of the main conditions that SMEs must meet for listing:

1. Hiring a Merchant Banker: SMEs must hire a merchant banker, just like in a regular IPO. They also need an SME IPO consultant to help them through the listing process.

2. Checking Compliance and Details: This step involves making sure that all the information, including financial data and accounts, is correct. This ensures that there are no errors or inconsistencies that might affect the company’s image.

3. Submitting a Red Herring Prospectus: SMEs, like other companies, must file a draft red herring prospectus. This document gives detailed information about the company’s operations and future prospects and helps guide potential investors.

4. Verification and Review: Every piece of information and document provided during the filing gets checked to rule out any wrong information or inconsistencies. There’s also a site verification at this stage.

5. Getting In-Principle Approval: SEBI gives initial consent to the SME, but they must meet additional requirements before they can make the public offer.

6. Opening the Issue: Once the company has done all the necessary checks and got approval, they can start accepting bids from investors. This offer stays open for a few days before it closes.

7. Listing and Share Trading: The entire process of listing on the stock market takes about a week. After the shares are listed and given to investors, they can be traded like any other shares in the secondary market.

The process from hiring a merchant banker to listing the IPO shares is quite lengthy and requires a lot of paperwork. If you’re an investor, understanding how this process works can be beneficial. The number of shares in a lot and the issue price are determined after looking at market trends and investor interest. Once listed, the value of these shares will change according to market demand, just like regular shares.

FAQ’s about SME IPO

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