IPO Boom. SME exchange IPOs soar, raising ₹954 crore in March alone

Initial Public Offerings (IPOs) in the SME exchanges have been raining, with 28 companies raising ₹954 crore in March alone. In fact, the funds mopped up by SMEs have more than doubled to the highest ever in this fiscal year to ₹6,300 crore against ₹R2,235 crore logged in FY23.

According to exchange data , the number of companies tapping the capital market has also jumped sharply to 205, up from 125 in FY23.

Retail participation has steadily risen in the SME IPO segment despite SEBI fixing a minimum investment of ₹1 lakh against ₹15,000 in the main board IPO.

• Read: SME IPOs: Hit big or get stumped  

The S&P BSE SME IPO index has more than doubled in this fiscal to 52,725 points against 24,405 logged on April 3, 2023, outperforming the 25 per cent surge in benchmark Sensex.

INVESTORS REJOICE

Some IPOs in the SME exchanges were oversubscribed multiple times and listed at a huge premium.

In January, Kay Cee Energy and Infra, which was seeking to raise ₹15 crore, received bids worth ₹1,052 crore. The company’s shares, which were priced at ₹54 a piece, were listed at ₹252 on NSE Emerge. Kay Cee Energy is currently trading at ₹177 a share.

• Investors guide. Know these 5 things before subscribing for SME IPOs 

Similarly, Maxposure, a digital media and entertainment company, was out in the market to raise ₹20.26 crore after pricing its shares at ₹33 a piece and received bids worth ₹13,256 crore, with the retail portion getting bids worth ₹6,990 crore.

• Read: M-cap of SME exchanges breaches ₹2-lakh crore mark

Maxposure made a bumper listing on the NSE Emerge at ₹145 per share, a premium of 339 per cent over the issue price of ₹33 per share. However, the stock is currently trading at ₹82.

CAUTION AHEAD

Market regulator SEBI has raised concerns about price manipulation in the SME segment and intends to enhance the disclosure mechanism to rein in the market’s run-away euphoria.

Deepak Sharma, Founder and Managing Director of Sarthi Capital Advisors, said SME Exchanges have become a good option for smaller businesses to raise capital and an opportunity for investors to invest in businesses that have huge potential to grow but also carry more risk than the larger business.

• Read: Small is big: Alpha chasing investors push SME IPO subscription to new high

The trend for SME IPO is going to be progressive as there are many good businesses yet to hit the market and growing investors’ appetite, he said

Alok Haralalka, Managing Director & CFO of Gretex Corporate Services, said the growth in SME IPOs will increase in the coming months as the awareness and participation of funds houses has given confidence to investors.

The positioning of India in the global market has been a key factor for the success of the capital market, and the next fiscal seems to be more positive with numbers of DRHP filed almost on a daily basis, he added.

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