What is SME IPO and How to Apply

You’ve probably heard about big companies like Zomato [NSE:ETERNAL] or Nykaa [NSE:NYKAA] going public. But did you know that small and mid-sized businesses can launch IPOs too? These are called SME IPOs, and they’re creating some serious buzz in India’s investment world.

Whether you’re a seasoned investor or just starting out, SME IPOs are worth understanding. Why? Because they offer a chance to invest early in promising small businesses before they potentially go big.

So, let’s walk through what SME IPOs are, how they work, how to apply, and what makes them different from the traditional IPOs you hear about in the news.

IPOs Aren’t Just for Big Companies

The stock market isn’t reserved for billion-dollar companies alone. India’s economy is booming with small businesses, many of which are looking for funding to scale up. That’s where SME IPOs come into play.

Back in the day, small companies had limited ways to raise money. But now, stock exchanges have opened special platforms tailored just for them. These platforms allow small and medium-sized businesses to list publicly through their IPOs.

What is an SME IPOs Explained

So, what is SME IPO in simple terms? An SME IPO (Small and Medium Enterprises Initial Public Offering) is when a small or medium-sized business offers its shares to the public for the first time, but through a dedicated SME platform like NSE Emerge or BSE SME. These platforms allow companies to raise money from investors just like big companies do, but without needing to meet all the strict requirements of the main stock exchanges.

SME IPO meaning is pretty straightforward: it’s a path that allows growing businesses to become publicly listed and raise funds directly from retail and institutional investors.

Understanding the Process of SME IPO Listings

The process is quite like a regular IPO, but with a few tweaks to make things easier for small firms. Here’s a simplified breakdown:

1. Eligibility: SMEs with post-issue paid-up capital up to ₹25 crore are allowed to list on the SME platforms.
2. Appointing a Merchant Banker: Just like big companies, SMEs also need a merchant banker (lead manager) to guide them through the listing process.
3. Due Diligence: The company’s finances, operations, and structure are reviewed to ensure transparency.
4. Filing the Prospectus: Instead of a red herring prospectus, SMEs submit a document that outlines the offer details.
5. Opening for Subscription: Once SEBI and the exchange approve it, the IPO opens for bids, usually for 3–5 days.
6. Listing: After allotment, shares are listed on BSE SME or NSE Emerge.

In essence, it’s a simpler, more accessible process compared to a traditional IPO.

Top Upcoming IPOs to Watch (23rd–27th June 2025)

1. Kalpataru Ltd IPO
2. HDB Financial Services Ltd IPO
3. Globe Civil Projects Ltd IPO
4. Ellenbarrie Industrial Gases Ltd IPO
5. Suntech Infra Solutions Ltd IPO

Applying for SME IPOs: Step-by-Step Guide

Applying for an SME IPO isn’t rocket science. But there are a few differences you should be aware of. 

1. Have a Demat and Trading Account
   You’ll need these to apply. Most brokers support SME IPO applications.
2. Check Ongoing SME IPOs
   Visit the NSE/BSE SME section or check your broker’s dashboard for live offers.
3. Use ASBA or UPI
   Apply via ASBA (Application Supported by Blocked Amount) through net banking, or UPI if your broker allows.
4. Mind the Minimum Investment
   Unlike regular IPOs, SME IPOs often have a higher lot size. Minimum investment can go up to ₹1–2 lakhs.
5. Wait for Allotment
   If shares are allotted, you’ll see them in your Demat account on the listing date.

And yes, retail investors can apply for SME IPOs, provided they’re comfortable with the higher ticket size.

Key Features of SME IPOs

Let’s sum up what makes SME IPOs different and interesting:

• Tailored for small businesses: Lighter regulations and simpler procedures make it feasible for growing companies.
• Higher risk, higher potential: You’re investing early in companies that could either fly or flop.
• Larger minimum investment: One lot in an SME IPO can be priced at ₹1 lakh or more.
• Lower trading volumes: SME stocks often have lower liquidity than mainboard stocks.
• Targeted investor base: Mostly institutional or experienced retail investors participate.

Understanding the Difference Between SME IPO and Mainboard IPO

Should You Invest in an SME IPO?

That depends on your investing goals and risk appetite.

SME IPOs are not ideal for quick profits or beginners. They require research, patience, and willingness to take on risk. That said, they’ve also delivered multi-bagger returns in the past. But not every SME IPO is a winner.

If you’re just starting out, observe a few issues, learn how they behave post-listing, and read through the offer documents before putting your money in.

As a rule of thumb, and like any investment, don’t just follow the hype. Read the prospectus. Research the company. Ask questions. Then decide if the opportunity aligns with your financial goals.

After all, sometimes, the small bets may turn out to be the smartest ones.

FAQs

• How can one apply for an SME IPO?

You can apply through your broker’s platform using UPI or ASBA.

• Who is eligible to apply for an SME IPO?

Anyone with a Demat account and a valid PAN can apply, provided they meet the minimum investment.

• Can retail investors apply for an SME IPO?

Yes, retail investors can apply, though higher investment requirements often mean fewer participants.

• What distinguishes an SME IPO from a regular IPO?

SME IPOs are meant for smaller companies with relaxed listing norms and higher lot sizes, while regular IPOs cater to larger, more established firms.