NEW DELHI: There has been unprecedented demand for the initial public offers (IPOs) from small and medium enterprises (SMEs) in calendar year 2023. So far 170 small firms launched their initial share sale process and debuted on the exchange. This will be the best year for IPOs of this segment as only 108 SME public issues were launched in 2022 and 59 in 2021.
The exuberance came as investors, stacked with cash, queued up to buy SME IPOs amid a sharp rally in the secondary market with the BSE Sensex and NSE Nifty gaining 16-17% each this year. The craze for small IPOs this year was such that 170 odd firms, which were seeking to raise a cumulative amount of Rs 4,500 crore received bids of Rs 3 lakh crore.
As per the data available with the exchange, about 50 IPOs were overbooked by over 100 times with a dozen firms seeing a booking of over 300 times. Only 3 board IPOs clocked subscription rates of over 100 times. “The FOMO (fear of missing out) phenomenon on making quick money gripped this particular market this year as ample liquidity was available at investors’ hands. Add to this, the excellent performance of many IPOs post listing added to the frenzy,” said a senior analyst at a brokerage firm.
He advised investors to do due diligence before investing in SME shares as regulations in this space aren’t robust and there have been instances of big crashes and unethical practices. Share prices of over 40 firms in this segment gave a listing gain of over 50% with 13 shares doubling in value on their first day.
Post listing, over 80 firms have given a return of over 50% while shares of nearly forty companies are trading lower than their issue price. Since their debut, shares of three SME firms- RBM Infracon Limited, Gayatri Rubbers and Chemicals Limited and Vishnusurya Projects and Infra Limited- have given a
return greater than 500%.
Craze for SME IPOs
Craze for small IPOs this year was such that 170 odd firms, which were seeking to raise a cumulative amount of Rs 4,500 crore received bids of Rs 3 lakh crore. Exuberance came as investorsqueued up to buy IPOs amid a sharp rally in the secondary market