SME IPO Boom: What’s Happening and Why It Matters

From Illiquid to In-Demand —

A Market Shift

For years, SME (Small and Medium Enterprise) stocks were ignored by mainstream investors. The biggest issue? Low liquidity. Once you bought an SME stock, it was hard to sell because there just weren’t enough buyers.

This kept many investors — especially institutions — away.

But the game has changed.

Post-COVID, we saw a wave of new-age, risk-taking retail investors enter the markets. At the same time, SEBI relaxed listing norms for SMEs, making it easier for smaller companies to raise capital via IPOs.

Today, SME IPOs are not only easier to apply for — they’ve become some of the hottest picks on Dalal Street.

The Numbers Tell the Story

• 2024 saw a record-breaking 240 SME IPOs hit the market.

• These IPOs raised ₹8,761 crore — the highest since the pandemic era.

• The average listing gain was 60%, and this number has been steadily increasing year after year.

• The S&P BSE SME IPO Index has gone from just 1,400 in 2021 to over 100,000 in 2025 — a massive surge that signals investor appetite.

Even in the face of global uncertainty — from US-China trade tensions to wars in West Asia and a short India-Pakistan conflict — SME IPOs have remained in demand.

While some large-cap IPOs are getting delayed or even pulled, SME IPOs are thriving.

Too Much Craze?

The demand is getting intense.

• In May 2025, 13 SME IPOs launched, more than double the number of mainboard IPOs (6).

• In just four days (May 27–30), six SME IPOs opened for subscription — and the response was wild.

• 
  

Let’s look at some numbers:

• Srigee DLM IPO: Subscribed 490x overallRetail investors: 243xHNIs: 1,500x

• Parmeshwar Metal IPO:Retail investors: 600xHNIs: 1,200x

Such massive oversubscription is a clear sign of investor frenzy. But when IPOs get subscribed hundreds of times over, it often reflects speculative hype, not just strong fundamentals.

In market terms, this is known as a "frothy" environment — when prices rise more because of demand and excitement, not because of the actual business value.

Risks That Can’t Be Ignored

Before jumping in, here are a few risks investors must keep in mind:

• Lower Regulatory Oversight:SME listings don’t go through the same level of due diligence or post-listing scrutiny as mainboard IPOs.

• Financial Shenanigans Are Real:Many SMEs may not follow the same accounting standards. In some cases, numbers can be dressed up to appear more profitable than reality.

• Low Liquidity Post-Listing:Just because IPOs are in demand doesn’t mean secondary trading will be easy. Selling shares later might still be hard, especially if the hype dies down.

• 
  

Final Thoughts

SME IPOs have turned into a wealth creation opportunity — but only for those who understand both reward and risk. The boom is real, but so is the volatility.

If you're exploring SME IPOs, make sure you're investing with:

✅ Research

✅ Risk management

✅ Realistic expectations