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SME IPO versus mainboard IPO
By InvestorTrack team · Last reviewed · 6 min read
Indian IPOs are listed on two kinds of platform. Mainboard IPOs list on the main boards of the NSE and BSE. SME IPOs list on separate platforms for small and medium enterprises, NSE Emerge and BSE SME. The process of applying looks the same, but the companies, the minimum bid, the trading and the risks are different enough that the two should be read differently.
The differences at a glance
The minimum bid is higher
An SME IPO asks for a much bigger minimum application than a mainboard IPO. The minimum has been changed by the regulator in recent years and further changes have been proposed, so do not rely on a number you read elsewhere, including here. The offer document and your broker's app state the minimum bid and the lot for the IPO you are looking at, and our application amount calculator works out the amount for any lot size and price.
The ₹2 lakh line that separates retail from HNI bids applies to SME IPOs too, and the minimum bid in an SME IPO can be a large share of it.
Why SME IPOs carry more risk
- Smaller businesses. Fewer customers, fewer products or a single plant can make results swing from year to year.
- Less trading. With fewer buyers and sellers, it can be harder to sell at the price you want after listing, and prices can move sharply on small volumes.
- Less scrutiny. There are usually fewer analysts and less public information than for a large company.
- Different listing-day rules. Price bands and trading rules for SME shares are set separately from the mainboard.
None of this means an SME IPO is a bad choice or a good one. It means the same headline number, such as a 100x subscription, says less about what the shares will do afterwards. Each SME IPO still has an offer document that discloses the business, the finances and the risk factors, and it is worth reading in full.
What to read in an SME IPO
- The use of the money (objects of the issue). A small SME issue that is mostly an offer for sale puts little money into the business.
- The promoters and their holding before and after the issue, and who is selling.
- Customer and supplier concentration in the risk factors.
- The financials over several years, especially cash flow, not only profit.
- The market maker named in the offer document, who is responsible for providing two-way quotes after listing.
Our IPO pages show these for each SME IPO on the Offer details, Financials and Company tabs when the data is available, and each page links the offer document so you can check it yourself.
Subscription and GMP on SME IPOs
SME subscription is often very high, 100x or 300x, because the issue is small and the category is narrow. Some sources leave a category such as QIB blank, and we show a blank category as a dash, never as zero. GMP for SME IPOs is thinner and less reliable than for large issues, since fewer people trade it. See what GMP is and how to read it.
Frequently asked questions
What is an SME IPO?
An IPO by a small or medium enterprise, listed on a separate SME platform of the exchange (NSE Emerge or BSE SME) rather than on the main board.
What is the minimum investment in an SME IPO?
It is much larger than in a mainboard IPO and is set by the exchange rules and the issue's offer document, which have been changed in recent years. Check the lot size and minimum bid on the IPO's page and in the offer document.
Are SME IPOs riskier than mainboard IPOs?
They generally carry more risk: the companies are smaller, trading after listing is thinner and prices can move sharply. That does not predict how a particular issue will do.
Can I apply for an SME IPO as a retail investor?
Yes, through the same broker or bank route, subject to the larger minimum bid. The retail and HNI lines follow the same ₹2 lakh boundary.
Why is SME IPO subscription so high?
The issues are small, so a modest amount of demand is a large multiple of the shares offered. A very high multiple on a small issue does not carry the same weight as on a large one.