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Learn how Mainboard and SME IPOs differ in eligibility, listing, and investor implications.
Initial Public Offerings (IPOs) allow companies to raise capital by offering shares to the public. In India, IPOs are classified into two main categories: Mainboard IPOs and SME IPOs (Small and Medium Enterprises). While both offer opportunities for businesses to go public, they differ significantly in size, regulations, and investor participation.
If you're an investor or business owner, understanding these differences can help you evaluate risks and returns more effectively.
A Mainboard IPO is launched by large companies that meet the eligibility norms of the primary stock exchanges like NSE or BSE. These IPOs attract institutional and retail investors due to larger issue sizes and robust disclosure norms.
Minimum post-issue paid-up capital: ₹10 crore and above.
Listed on the main exchanges (NSE, BSE).
Subject to SEBI's stringent regulatory and disclosure norms.
Widely tracked by analysts and institutional investors.
An SME IPO is meant for small and medium-sized enterprises seeking to raise funds through the capital market. These are listed on platforms like NSE Emerge or BSE SME.
Minimum post-issue capital: ₹1 crore to ₹10 crore.
Simplified compliance and disclosure norms.
Typically involves market makers to ensure liquidity.
Less institutional participation, higher risk and reward.
The following table highlights the differences between Mainboard IPO and SME IPO:
Feature |
Mainboard IPO |
SME IPO |
|---|---|---|
Eligibility |
₹10 Cr+ post-issue capital |
₹1 Cr – ₹10 Cr |
Exchange Platform |
NSE, BSE |
NSE Emerge, BSE SME |
Disclosure Norms |
As per SEBI ICDR for Mainboard |
Simplified norms under SEBI SME framework |
Investor Base |
Retail + Institutional |
Mostly retail or HNIs |
Trading Lot Size |
1 share |
100–1000 shares |
Underwriting |
Optional |
Mandatory |
Liquidity |
High |
Often lower; requires market makers |
High-risk takers: SME stocks can offer large gains, but also come with higher volatility.
Long-term investors: Those willing to hold and wait for businesses to grow.
Informed investors: Those capable of evaluating small-cap companies with limited public data.
Lower liquidity can lead to price manipulation.
Smaller companies may have unstable earnings or weak management.
Lack of extensive analyst coverage or research.
In 2023, IdeaForge Technology, initially listed as an SME IPO, transitioned to a Mainboard listing after meeting financial and regulatory benchmarks, showcasing the potential growth trajectory of SME firms.
Choosing between a Mainboard IPO and an SME IPO depends on your risk appetite, capital availability, and investment horizon. Mainboard IPOs offer more stability and liquidity, while SME IPOs provide high-risk, high-return potential for those who can stomach the volatility. Either way, due diligence is key before investing in any public offering.
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.
SME IPOs generally have higher minimum investment requirements due to larger lot sizes—typically 1,000 shares per lot or more. This means retail investors may need to invest ₹1–2 lakhs or more per application, depending on the share price. This structure differs from Mainboard IPOs, where lot sizes and entry amounts are smaller, making SME IPOs less accessible for small-ticket investors.
Yes. Companies listed on SME platforms such as NSE Emerge or BSE SME can apply to migrate to the Mainboard after a minimum of two years. This is subject to meeting certain criteria, including consistent profitability, net worth thresholds, and shareholder approvals. Migration increases visibility, enhances liquidity, and can attract a broader investor base.
Yes, typically. SMEs are in earlier stages of business development and may not have long operational histories. They also tend to have lower trading volumes, which affects liquidity. Additionally, due to limited analyst coverage and financial disclosures, investors may face challenges in evaluating the true potential or risks of the business. These factors collectively make SME IPOs a higher-risk, higher-reward segment.
The regulatory framework for SME IPOs is defined by the Securities and Exchange Board of India (SEBI). However, post-listing operations, compliance, and governance are managed by the respective SME platforms—BSE SME and NSE Emerge. These exchanges ensure that companies adhere to minimum public shareholding, reporting standards, and corporate governance practices.
Institutional participation is generally low. SME IPOs are predominantly subscribed by retail investors, high-net-worth individuals (HNIs), and sometimes regional family offices. The limited scale and relatively higher due diligence required often deter mutual funds and large institutional players. However, post-migration to the Mainboard, institutional interest may increase if the company demonstrates strong fundamentals.
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