SME IPO: Understanding, Current & Upcoming SME IPO List, How to Apply

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Simran Kaur
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SME IPO

SME IPO stands for Small and Medium Enterprise Initial Public Offering. It is a regular Initial Public offering by small and medium enterprises or companies. It is a process when a private small and medium company decides to put the public on the stock exchange at the time. SME has low capital costs. By SME IPO, the SME companies raise from the market for working capital, business expansion, growth and other business activities. Let’s know about it more-

SMEs play an important role in economic growth and employment generation in the countries. There are 66 lakh new companies registered in 2022. Access to capital is often a challenge for SME companies which limits their growth. Through SME IPOs, companies can raise funds from public investors and fuel their companies for better expansion and economic growth in the country.

Current SME IPOs

Company Name Open Close IPO Size
AVP Infracon Limited Mar 13 Mar 15 Rs 49.55 – 52.34 Cr
Royal Sense Limited Mar 12 Mar 14 Rs 9.86 crores
Signoria Creation Limited Mar 12 Mar 14 Rs 8.71 – 9.28 Cr

Upcoming SME IPOs

Company Name Open Close IPO Size
Chatha Foods Limited Mar 19 Mar 21 Rs 34 Cr
Enser Communications Ltd Mar 15 Mar 19 Rs 16.17 Cr
Enfuse Solutions Limited Mar 15 Mar 19 Rs 21.27 – 22.44 Cr
KP Green Engineering Ltd Mar 15 Mar 19 Rs 189.50 crore

How To Apply For SME IPOs?

As said, an SME IPO is a regular IPO process, here it is the steps to apply for an SME IPO-

  • First, understand the SME IPO and finalise which SME you want to apply for. Once you decide, check its financial performance, and IPO details like issue size, price band and subscription period.

  • Register for a Demat Account to apply for SME IPO shares. Open an account with any authorized DP of your choice.

  • Ensure you have a UPI ID linked to the bank account because you can apply online through the Unified Payments Interface (UPI) mechanism only.

  • Choose  ASBA (Application Supported by Blocked Amount) to apply for the SME IPO Share because it allows you to block the funds in the bank account till the SME IPO allotment.

  • Login to your Demat account and enter details like your personal information, bid quantity, price, and UPI ID.

  • Carefully check the details, because you can not alter it later and submit the form. Your IPO application is sent to the SME.

  • Keep track of your SME IPO status. The result will be available after 1 week of the SME Subscription period ends.

  • If you allot the share, it will be credited to your Demat Account; if not, your block funds will be released into your account.

Why is an SMP Initial public offering carried out?

An initial public offering is fundamentally executed to obtain financing from new investors. In exchange, these agents receive a stake in the company’s capital.

Thus, this public offering is an alternative, for example, to the acquisition of debt or financing through greater contributions from the firm’s current partners.

An IPO is carried out in a context in which the company is going to expand. Before this milestone, its sources of financing have been funds from a small number of shareholders. These are usually the founders and their loved ones (family and friends), angel investors and venture capital funds, for example.

However, with the IPO an important leap is made. The company receives a greater number of investors and a greater volume of capital to finance its operations.

In that sense, it is worth emphasizing that this public offering is not possible at an early stage, but rather when the company is already moderately consolidated. That is, the profitability of your business has been proven.

How is an IPO done?

To carry out an initial public offering, proposals will first be privately solicited from potential SMEs. You can also launch a public announcement. Each aspiring SME presents his plan, with an offer price for the shares, the number of shares, an estimated period for release to the market, etc. Thus, the different offers received are discussed.

The chosen SME is responsible for preparing the documents required by the regulator, presenting the company to investors, as well as issuing the shares.

Advantages and disadvantages:-

Among the advantages of an initial public offering we can highlight:

  • The company accesses a broader market to obtain financing.

  • Increases the prestige and improves the public image of the company.

  • As its financial information is public, the company can access credit with better conditions.

  • The company can expand the business and establish a new plan for the Company’s growth.

However, we can point out some disadvantages:

An IPO involves an investment, both in the process and after the public offering. This is because the company must worry about its relationship with the investing public.

In line with those mentioned above, the price of the company’s shares on the stock market can become a distracting element for management. That is, greater attention may be paid to the company’s price than to the net profit results, for example.

The company is obliged to notify relevant events, as we mentioned previously. This may mean revealing business actions or strategies that the firm, in principle, would be better off keeping secret so that its competitor does not know that information, for example.

FAQs:-

  1. What does SME IPO stand for?SME IPO stands for Small and Medium Enterprise Initial Public Offering, a process where SMEs offer shares to the public for the first time.
  2. Why are SME IPOs important?SME IPOs help SMEs raise funds from the public for working capital, expansion, and growth, contributing to economic development.
  3. How do I apply for an SME IPO?To apply for an SME IPO, you need to have a Demat account, register for the IPO, and apply online through the UPI mechanism.
  4. What is ASBA in SME IPO applications?ASBA (Application Supported by Blocked Amount) allows you to block funds in your bank account until the SME IPO allotment is finalized.
  5. How can I track my SME IPO application status?You can track your SME IPO application status through the registrar’s website or the stock exchange where the IPO is listed.
  6. What are the advantages of SME IPOs?Advantages of SME IPOs include access to capital, improved company image, better credit terms, and opportunities for business expansion.
  7. What are the disadvantages of SME IPOs?Disadvantages of SME IPOs include investment costs, increased regulatory obligations, and potential distractions for management.
  8. How is an SME IPO carried out?An SME IPO involves soliciting proposals from potential SMEs, preparing regulatory documents, presenting the company to investors, and issuing shares.
  9. When is an SME IPO carried out?An SME IPO is typically carried out when a company is moderately consolidated and profitable, seeking to expand its operations.
  10. What does an SME IPO achieve for a company?An SME IPO helps a company access a broader market for financing, increases its prestige, improves its public image, and facilitates business expansion.

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