Understand how Mainboard and SME IPOs differ in structure, eligibility, and investor suitability.
Initial Public Offerings (IPOs) in India are classified into Mainboard and SME segments. While both enable companies to raise public capital, they differ in eligibility, compliance norms, listing platforms, and investor reach.
SME IPOs are public issues launched by small and medium-sized enterprises to raise funds from the public. These are governed by relaxed regulatory norms compared to mainboard IPOs.
In India, SMEs are classified by their turnover and investment in assets like machinery or equipment. These businesses generally operate on a smaller scale with lower capital needs.
Listed on platforms like NSE Emerge and BSE SME
Minimum post-issue capital between ₹1 Crore and ₹25 Crores
Reduced compliance and reporting requirements
Smaller issue size and limited investor base
A Mainboard IPO (Initial Public Offering) refers to the public issue of shares by well-established, larger companies that are listed on the main platform of stock exchanges such as the NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) in India. These companies must meet stricter eligibility criteria, including higher net worth, profitability, and disclosure standards as defined by SEBI (Securities and Exchange Board of India) and the exchanges.
The table below outlines the key differences between the two categories of IPOs:
| Criteria |
Mainboard IPO |
SME IPO |
|---|---|---|
| Company Size |
Large, well-established |
Small to medium-sized |
| Listing Platforms |
NSE, BSE |
NSE Emerge, BSE SME |
| Minimum Net Worth |
Higher (≥ ₹3 Crores) |
≥ ₹1 Crore |
| Minimum Post-Issue Capital |
≥ ₹10 Crores |
₹1 Crore to < ₹25 Crores |
| Investor Base |
Large and diverse |
Niche and limited |
| Risk Profile |
Relatively lower |
Comparatively higher |
| Liquidity |
High |
Moderate to low |
| Eligibility |
Strict SEBI norms on profitability, net worth, disclosures |
Relaxed norms; fewer years of profitability may suffice |
| Regulatory Framework |
Comprehensive SEBI and exchange regulations; full IPO process |
Simplified compliance; SME-specific regulations |
| Market Exposure |
Wide visibility; analyst coverage; media attention |
Limited exposure; less analyst tracking |
| Funding Potential |
High—can raise large capital |
Limited-suitable for smaller funding needs |
Mainboard and SME IPOs serve different types of companies—large firms with wider reach versus smaller businesses with simpler requirements. Knowing their structural and procedural differences helps investors make informed evaluations.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
The key difference is company size and compliance—Mainboard IPOs target large firms, while SME IPOs are for smaller businesses with easier norms.
Retail investors in SME IPOs must have a valid demat account, a PAN, and sufficient funds in a linked bank account. They can apply for shares up to ₹1 Lakh, classified as retail under SEBI guidelines, with allotments often via lottery if oversubscribed, ensuring fair access.
SME IPOs carry higher risks due to smaller company size, limited financial history, and lower liquidity, often leading to price volatility. Mainboard IPOs, involving larger firms with stricter SEBI regulations, offer more stability but face market risks. Both require careful evaluation of financials and market conditions.
SME IPOs are listed on platforms like NSE Emerge and BSE SME, designed for smaller enterprises.
Typically, eligible SME IPO companies have a paid-up capital under ₹25 Crores, a net worth above ₹1 Crore, and full compliance with listing norms.
The lot size in SME IPOs is determined by the company and its merchant banker, based on SEBI regulations, to ensure affordability for retail investors. Typically set between 1,000-3,000 shares, it reflects the issue price and minimum application value, often around ₹1 Lakh, to balance accessibility and demand.
SME IPO shares are sold through a public offer where investors apply via a demat account using ASBA or UPI during the subscription period. Post-allotment, shares are credited to the demat account and traded on SME platforms like NSE Emerge or BSE SME, following SEBI guidelines.