SME IPOs

What an SME IPO is

Small and medium enterprises (SMEs) can list on separate platforms run by the exchanges: NSE Emerge and BSE SME. The companies are usually much smaller than those on the main board, and the rules for listing are lighter.

An SME IPO works much like a mainboard IPO. There is an offer document, a price (often fixed, sometimes a band), a lot size and an allotment, followed by listing on the SME platform.

How they differ from mainboard IPOs

• Bigger minimum application: SME lots are set so that the smallest application is a large sum. Under SEBI’s rules from 2025, the minimum application size for an SME IPO is set so that it is more than ₹2 lakh, which in practice means individual investors apply for two lots.
• Offer document reviewed by the exchange: the offer document of an SME IPO is filed with and reviewed by the stock exchange rather than going through SEBI’s full review.
• Market makers: for a period after listing, a market maker is appointed to keep offering to buy and sell the shares, because trading can be thin.
• Trading in lots: on the SME platform, shares usually trade in lots rather than one share at a time.
• Migration: a listed SME can later move to the main board if it meets the main board’s conditions.

Investor groups in an SME IPO

An SME IPO still has portions for individual investors, non-institutional investors and qualified institutional buyers, and sometimes a portion for the market maker. The exact split is in each offer document. Exchanges publish subscription figures by group, as they do for mainboard IPOs.

On niftyinvestor, where the exchange shows SME bids as one combined figure, we say how we worked out the split between groups on the IPO page.

Risks particular to SMEs

Small companies can be more affected by one customer, one product or one person. Trading after listing can be thin, so it may be hard to sell shares at a quoted price, or at all, on a given day. Price moves can be large in both directions.

SEBI has warned investors in the past about misleading promotion of some SME issues and about unsolicited tips on social media. Reading the offer document and checking who the promoters and lead managers are is part of understanding any SME IPO.