Thanks to the sharp rally and robust new listings, the market capitalisation of BSE SME and NSE Emerge listed companies have crossed ₹2-lakh crore for the first time last year and the momentum is expected to continue this year with a long list of initial public offerings (IPOs) waiting to hit the market.

The market-cap of 474 companies listed on BSE SME jumped to ₹1.10-lakh crore on Wednesday against ₹75,000 crore logged in July last year.

Similarly, NSE Emerge market-cap crossed ₹1-lakh crore for the first time last month. As on date, 397 companies are listed on NSE Emerge with fund raising of over ₹7,800 crore.

Huge rush to invest

There has been a huge rush to invest in SME exchanges, especially in the IPOs. For instance, Kay Cee Energy & Infra IPO to list on NSE Emerge has received the highest-ever subscription of ₹16,700 crore against the issue size of ₹15.93 crore.

The issue, which closed on Tuesday, was subscribed by a whopping 960 times, with the retail portion getting subscribed 1,311 times and high-networth individuals subscribing 1,668 times over the allotted quantity.

The Rajasthan-based EPC company had fixed the price band at ₹51-54 per share. As of September-end, Kay Cee Energy had 15 projects with a total order book value of ₹550 crore. It had received three projects along with Jost Engineering worth ₹363 crore from Rajasthan Rajya Vidyut Prasaran Nigam.

Multi-year phenomenon

Vipin Aggarwal, MD, Narnolia Investment Banking, said the uptrend in SME platform is going to be a multi-year phenomenon as the Indian economy is on a strong growth path for the next decade, but there will definitely be some profit-booking on the exchanges along the way.

SME contribution in GDP is nearly 50 per cent and is only represented by a market-cap of just ₹2-lakh crore. With more companies listing on the exchange platform, the SMEs’ representation through market-cap will go up sharply, he said.

The fund-raise through IPOs on SME Exchanges is expected to touch ₹8,000 crore this year compared with ₹5,000 crore mopped up last year, he added.

Overall, he said the fund-raise by SMEs through IPOs will exceed ₹20,000 crore over the next two years, as positive news on economy and political stability provides bullish undertone to the market.

Some pressure too

Uday Nair, Director, FedEx Securities, said that after the sharp rally, there can be some profit-booking this year which can result in some pressure on the market during the mid-year.

However, he said the overall scenario looks interesting with the number of IPOs in pipeline, including the IPOs already approved. On an overall basis, the amount raised should be higher compared with last year with a possible increase in the average issue size, he said.