5 firms make for 60% of BSE SME’s ₹10,000-cr m-cap

The Modi wave has not only swept key benchmark indices in the equity markets to a new high, but also some of the companies listed on the SME (small and medium enterprises) platform.

There are 82 companies listed on the BSE SME platform while another 25 companies are listed on the NSE Emerge.

Of the 80 companies listed on the BSE SME platform, a group of five companies — GCM Securities, Eco Friendly Food Processing Park, Esteem Bio Organic Food, Channel Nine Entertainment and HPC Bioscience — seems to be ruling the roost. These companies together command a marketcap of ₹6,400 crore, accounting for 64 per cent of the BSE SME’s total marketcap of ₹10,000 crore. Marketcap indicates the total value of the listed entities.

Interestingly, Eco Friendly Food Processing, which raised ₹7.5 crore in January last year at an issue price of ₹25 a share, closed at ₹536 on Monday. Similarly, Esteem Bio Organic Food Processing, which listed in February last year after issuing shares at ₹25, has touched ₹480.

Last fiscal, the five companies cumulatively registered revenue of ₹13 crore and net profit of ₹4.57 crore. Capital market regulator SEBI has empanelled 86 market-makers to provide two way quotes for 75 per cent of the trading hours and companies have to necessarily hire a market-maker for three years. The fees paid to the market-makers vary across companies.

Paras Bothra, Vice-President, Ashika Stock Broking said retail investors should tread with caution on the SME platform as the risks are very high since not much is known about the pedigree of the company or its promoters.

Mahavir Lunawat, Managing Director, Pantomath Advisory Services Group, said liquidity on the exchange is constrained as investors are allowed to trade in lot sizes of ₹1 lakh each.

“Various investor bodies have made representations to the market regulator to reduce the lot size so that investors can book partial profits on their investments,” he said.

In existence for the last three years, the SME platforms have gained traction in the last two years. About 17 companies have filed their prospectus for listing.

Riding on positive change in sentiments across markets, six companies in the last eight months declared bonus shares for their investors. The quantum of new share issuance has surprised many. For instance, Sangam Advisors in July allotted 57 bonus shares for every 100 shares held, while Lakhotia Polyesters in the same month gave out 18 shares as fully paid bonus shares for every 10 shares held.

Some of the companies listed on the SME platform have grown in size and are converting their reserves into capital by issuing bonus shares, said Lunawat.

Recently, RCL Retail received its board approval to migrate from the SME to the main trading board — BSE. The company’s shares closed at ₹23 on Monday.

Besides shares having face value of ₹10, a company has to remain listed on the SME platform for two years and should have a minimum capital base of ₹10 crore in order to switch over to the main trading platform.

Meanwhile, the BSE’s aim of listing 100 companies on its SME platform by December-end may not materialise, as still many are in the processing stage itself.

In March 2012, India’s oldest exchange launched a platform for small and medium enterprises to raise equity capital. The NSE also followed suit in the same year with ‘Emerge’.

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