SME IPOs have emerged as a key focus area for retail investors. The growing participation in IPOs, particularly in the SME segment, has seen significant growth over the years, driven by the expectation of quick gains. However, many investors overlook the volatility and risks associated with SME IPOs compared to mainboard listings.
The SME platform has played a crucial role in facilitating fundraising for MSMEs, and there has been a noticeable rise in awareness and interest among stakeholders, entrepreneurs, and investors.
In this article, we will explore the increasing participation of retail investors in SME IPOs, their historical performance, and the factors driving this surge.
What’s Happening?
In January 2025 alone, 24 companies went public, with 18 belonging to the SME category, reflecting the growing preference of small and medium enterprises for stock market listings.
Moreover, in CY24, out of 332 IPOs, only 81 were listed on the mainboard, while 236 came from the SME segment — nearly three times the number of mainboard listings. The funds raised through SME IPOs stood at Rs 92 billion, a sharp increase from Rs 49 billion in 2023, as reported by Livemint.
This surge in IPO listings helped India achieve a historic milestone, making it the top country globally in terms of IPO volume for the first time. India surpassed both the US and Europe, listing nearly twice as many IPOs as the US and about two-and-a-half times more than Europe.
Increasing Retail Participation in SMEs
Retail investor participation in SME IPOs has been notably higher compared to mainboard IPOs. The average number of retail applicants in SME IPOs has surged significantly, rising from 29,755 in 2022 to nearly 2.3 lakh in 2025. This number climbed to 78,450 in 2023 before surpassing the one-lakh mark in 2024, reaching 1.88 lakh, as per Moneycontrol.
When SME platforms were launched by both exchanges in 2012, retail participation was minimal, with only a few hundred investors on average. By 2017, this number had increased to 8,361 alongside a rise in SME IPO listings but later declined to 3,222 in 2018 and further to 748 in 2019. During the pandemic, retail participation in SME IPOs dropped below 300.
Despite the higher risks associated with SME IPOs, such as lower liquidity, high volatility, and limited regulatory oversight, investors continue to apply enthusiastically. While SMEs are more vulnerable to market fluctuations and have less financial transparency, the potential for high returns continues to attract retail investors.
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SME IPOs by Subscription
SME IPOs have seen significant participation from retail investors. Below are the top 10 most subscribed SME IPOs in 2024:
Factors Driving Increased Investor Participation
Retail investors continue to show strong interest in SME IPOs, primarily due to the potential for exceptional returns in a short period. Many SME IPOs have delivered multibagger gains on listing days. Additionally, stricter norms — such as mandatory profitability criteria — have boosted investor confidence by ensuring higher-quality listings.
Growing awareness about SME IPOs, which provide opportunities to invest in emerging businesses across various sectors, has also contributed to increased participation. Furthermore, bullish market trends and a rising number of retail investors in equity markets have further fueled this interest.
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What’s Next?
SME IPOs have played a vital role in enabling MSMEs to unlock their potential by providing a credible avenue for raising capital and gaining visibility. For investors, they offer a unique opportunity to diversify their portfolios by investing in high-growth MSME companies.
Regulatory bodies like SEBI, along with NSE and BSE, have tightened rules for public fundraising and listing on stock exchanges, ensuring better investor protection. As awareness grows and SEBI continues to introduce measures to safeguard investors, participation in SME IPOs is likely to remain strong in the coming years.
*The companies mentioned in the article are for information purposes only. This is not an investment advice.
*Disclaimer: Teji Mandi Disclaimer
