SME IPOs Demand Greater Caution: Key Risks to Consider

SME IPOs: As of the end of August, 28 initial public offers (IPOs) have already taken place this financial year, raising close to Rs 40,000 crores. It’s too early to say for sure, but there are signs that this could be the best year ever for mainboard IPOs.

As a point of reference, 76 IPOs raised about Rs 62,000 crore last year. We had 37 IPOs that raised Rs 52,000 crore the year before that.

Because there are so many IPOs coming up, we might have a record year. Right now, 22 companies have SEBI approval and want to raise close to Rs 20,000 crores.

The biggest one is Bajaj Housing, which will cost close to $1 billion. Besides this one, 44 more companies want to raise close to Rs one lakh crores.

One of these is the big Hyundai Motor scandal, which should be worth around $3 billion when it comes out later this year. But there are other things to look forward to, like the Sugi IPO, Mega Mart, Niva, and Bupa. None of these problems may come up.

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In the months after the budget, 16 were filed in July, 17 in August, and more are on the way. There is more demand in both the main and secondary markets now that domestic asset management and mutual funds are big players.

Because of this, the country doesn’t need as many foreign investors. Now, issuers and investment issuers can use the local market to help them start new issues.

It has been a mixed bag in the SME space, though. Some companies have even been fined by the government. More and more small investors are getting into initial public offerings (IPOs). Investors should be careful in this area.

It has grown a lot since FY 2019-2020, when there were only 408 store applications. By 2024-2025, there will be 2.13 lakh. This rise is because these initial public offerings (IPOs) saw big selling gains.

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SME IPOs don’t need approval from SEBI; they are accepted by exchanges, who can make rules. This means that regulators need to step in more.

From the point of view of marketing gain, small companies that don’t have a lot of public information are more likely to invest in IPOs.

SEBI data shows that three out of four individual investors leave an IPO within a month of it going public. This means that most investors are mainly interested in the listing.

It’s easier to invest in IPOs now, but regulators and stock markets need to pay more attention to the investors who are there when the company first goes public and to those who buy shares afterward.

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