In August 2023, a ₹9 Crore SME IPO issue received bids for more than ₹2,500 Crores, showing the increasing popularity of this investment option. This is due to India’s growing start-up culture, helping new companies sprout up that may evolve into lucrative investment opportunities. 

 

Exploring investment options in small and medium enterprises (SMEs) may be a valuable consideration if you are looking to invest in stocks. Read on to learn more about SME IPOs and how to apply for it. 

What is an SME IPO?

An SME IPO is the process through which small and medium-sized enterprises offer their stocks to the general public for subscription. The issuing company offers the general public an opportunity to purchase its shares through an SME IPO. 

 

The primary objective of an SME IPO is to secure capital for the expansion and development of the company. Instead of seeking funds from numerous investors, these small and medium-sized enterprises can directly access the public market and get the required funds along with significant liquidity. 

 

Meanwhile, a typical IPO process consists of issuing shares to the public, thereby helping companies raise funds. 

Benefits of an SME IPO?

SME IPOs are associated with certain significant advantages for the issuing companies, stakeholders and investors. Here are the benefits that come with an SME IPO -

Generates Capital

  • The main aim behind companies issuing SME IPOs is to secure significant capital.

  • Receive investments from the general public, eliminating the need to secure investments from institutional investors. 

  • Getting the right amount of capital is essential for both big and small enterprises to function smoothly. Thus, SMEs can leverage these resources towards various strategic initiatives and the development of the company.

Increases Company's Credibility

  • Heightens the visibility and enhances the credibility of the company in the market.

  • If the company is listed on reputed stock exchanges like NSE and BSE, it aids in solidifying the company's reputation. This, in turn, helps attract potential business opportunities for the issuing company.

Liquidity for Shareholders

  • Enhanced liquidity for shareholders.

  • The exit option provides shareholders with an opportunity to sell their shares and unlock the value of their investments. This helps them to further diversify their investment portfolio and amplify their investments.

How to Apply for an SME IPO?

Here are the steps you must follow to apply for an SME IPO.

  • Step 1: Open a Demat Account

Opening a Demat account is the first step for trading in the stock market.

  • Step 2: Monitor IPO Announcements

The next step is to keep a close watch over IPO announcements. You can check the details from new channels or stock exchanges. 

  • Step 3: Submit Your IPO Application

Once the IPO is open, you can submit your application through the official website. You must provide the number of lots you intend to purchase and other information accurately.

  • Step 4: Bid and Complete Payment

Determine your bid price within the price range issued by the company and make the final payment.

  • Step 5: Allocation

Finally, the stock exchange and the issuing company allocate the shares after assessing the demand and availability.

 

If the shares are allotted, they will get transferred to your Demat account. However, in the case of non-allotment of shares, the amount you have paid will be refunded to the respective bank account.
 

SME IPO launches are a win-win situation for both the issuing company and investors. Also, investors stand the chance of getting high returns when the company earns profits. However, it is essential to know all you can about the company before investing in them.

 

In case SME IPO investments do not align with your preferences, an assortment of other investment opportunities is available on Bajaj Markets. So, access the platform and embark on your investment journey today!

FAQs on SME IPO

What does the SME IPO subscription status mean?

SME IPO subscription refers to the frequency with which an SME is subscribed through stock exchanges. These exchanges update the SME IPO subscription status on their official websites accurately. 

Can I sell my SME IPO shares?

Yes, you can sell your SME IPO shares. However, it is essential to note that their trading is restricted to specific exchanges or platforms, such as NSE or BSE, where they are officially listed.

How does a normal IPO and an SME IPO differ?

A normal IPO includes larger corporations. On the other hand, Small and Medium Enterprises (SME) IPO includes companies on a smaller scale. The primary aim of issuing the IPO is to raise capital from the general public

Are there separate stock exchanges for SME IPOs?

Yes. There are separate stock exchanges for SME IPOs: NSE EMERGE and the BSE SME platforms.

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