SME IPO Platform

Pocketful's SME IPO page gives you complete information about new and ongoing SME IPOs in one place. Here you can easily apply for an SME IPO, check your subscription status, and track allotment updates. SME IPOs offer early-stage investment opportunities in emerging small and medium-sized companies. This page provides you with essential details, issue data, and the application process in a clear and easy-to-understand manner, helping you make informed decisions.

What is an SME IPO?

SME IPOs (Small and Medium Enterprises Initial Public Offerings) are the process by which small and medium-sized companies raise capital from the public for the first time and list their shares on a stock exchange's dedicated SME platform.

In India, SME IPOs are primarily listed on two platforms:

• BSE SME
• NSE Emerge

These platforms are specifically designed for companies smaller than mainboard companies. Typically, these companies have a post-issue paid-up capital of up to ₹25 crore (as per current SEBI regulations). SME IPOs tend to have smaller issue sizes than mainboard IPOs, but their growth potential can be faster, as these companies are typically in their expansion phase. However, it's important to understand the company's financials, business model, and risk factors before investing, as SME companies can face relatively higher volatility and liquidity risks.

Features of SME IPOs

The structure and rules of an SME IPO differ from those of a mainboard IPO. Below, the key features of an SME IPO are explained in detail so you can clearly understand the full picture before investing.

Small and Medium-Sized Companies: SME IPOs are specifically designed for small and medium enterprises. These companies are typically in the growth phase and raising capital for expansion. Their size and revenue scale are smaller than those of mainboard companies.

Separate Listing Platform: SME IPOs are primarily listed on two specialized platforms: BSE SME and NSE Emerge. These platforms are designed for SME companies and their compliance rules are slightly different from those of mainboard companies.

Lower Issue Size: The total issue size of an SME IPO is smaller than that of a mainboard IPO. According to current SEBI regulations, the post-issue paid-up capital of SME companies is generally up to ₹25 crore.

Larger Lot Size and Higher Minimum Investment: The lot size in SME IPOs is typically larger. This means that retail investors have to invest a larger amount at one time. This is why the minimum application amount for SME IPOs is higher than for mainboard IPOs.

Market Making Mandatory: To maintain liquidity in SME IPOs, it is mandatory to appoint a market maker. The market maker processes buy and sell orders, ensuring some degree of active trading in the shares.

Relatively Low Liquidity: Although a market maker is present, trading volume for SME shares may be lower than for mainboard shares. This can lead to higher price volatility.

Migration Option: If a company qualifies in the future based on size and performance, it can migrate from the SME platform to the mainboard, provided it meets exchange regulations.

Different Risk-Return Profile for Investors: SME IPOs may have higher growth potential, but they may also involve greater business risk and price fluctuations. Therefore, this investment is suitable for those with a relatively high risk appetite.

SME IPO Listing Process

The listing process of SME IPO is completely regulated and involves several stages.

Appointment of a Merchant Banker: 

First, the company appoints a SEBI-registered Merchant Banker. This entity is responsible for the entire IPO strategy, valuation, document preparation, and coordination with the exchange. The IPO process cannot begin without a Merchant Banker.

Preparation of the Draft Red Herring Prospectus (DRHP): 

The company, in collaboration with its Merchant Banker, prepares the DRHP. It provides complete information about the company, such as:

• Business structure and model
• Audited financial statements from previous years
• Promoters and management information
• Risk factors
• Use of funds to be raised from the IPO

This document is submitted to the relevant SME platform BSE SME or NSE Emerge for review.

Exchange Review and Observations: 

The stock exchange examines the DRHP in detail. If any clarifications or corrections are required, the company is asked to respond. Once all objections are addressed, the IPO is approved.

Final Prospectus and Price Band Announcement: 

After approval, the final Red Herring Prospectus (RHP) is filed. It announces the final price band, lot size, issue size, and IPO opening and closing dates.

IPO Opening (Subscription Period): 

IPOs typically open for 3–5 working days.Investors apply through ASBA or UPI during this period. Application funds are blocked in bank accounts until the allotment process is complete.

Subscription data is updated daily, indicating the number of subscriptions to the IPO.

Allotment Finalization: 

After the IPO closes, the Registrar finalizes allotments based on subscriptions.

If the IPO is oversubscribed, allotment is made proportionately or through a lottery system (lottery is often used in the retail category).

Funds Unblocked / Refund

The blocked funds of investors who are not allotted shares are automatically unblocked in their bank accounts.

Shares Credit: 

Shares received by allotment holders are credited to their Demat account prior to listing.

Listing Day: 

On the designated date, shares are listed on the SME platform and trading begins. The listing price depends on demand and market conditions; it may be above or below the issue price (listing gain).

SME IPO Eligibility Criteria & Requirements

Before investing in an SME IPO, it's important to understand that there are specific eligibility requirements for both the company and the investor. These requirements are set by stock exchange and regulatory rules, ensuring that only eligible companies can raise capital from the public.

Company Eligibility (Company Eligibility Requirements)

1. Mandatory Public Limited Company: The company must be a public limited company by structure. A private limited company cannot directly launch an SME IPO it must first convert to a public company.
2. Paid-up Capital Limit: 

According to SEBI and SME Platform regulations:

• Post-issue paid-up capital should generally be up to ₹25 crore.
• If the capital exceeds this limit, the company may be required to comply with mainboard listing requirements.

3. Track Record and Financial Performance: 

• The company must have a stable business track record.
• Audited financial statements for previous years are mandatory.
• Net tangible assets and net worth must meet the minimum requirements of the respective SME platform.

4. Profitability or Net Worth Criteria: To be eligible for listing on the SME platform, a company must meet the financial criteria set by the exchange.

Typically:

• Positive net worth
• Solid asset base
• Proof of business continuity

5. Mandatory Market Maker: Appointing a market maker is mandatory in SME IPOs. A market maker helps maintain initial liquidity after listing.
6. Corporate Governance Compliance: 

The company must:

• Comply with the Registrar of Companies (ROC)
• SEBI and exchange disclosure norms
• Proper board structure and audit compliance

Investor Eligibility

1. Active Demat and Trading Account: Investors must have an active Demat and Trading account, as shares are credited directly to the Demat account upon allotment.
2. Investment Based on Minimum Lot Size: 

• The lot size in SME IPOs is larger.
• This means that retail investors must invest a certain minimum amount, which may be higher than in mainstream IPOs.

3. Valid PAN and KYC: 

• PAN is mandatory.
• KYC must be fully updated.

4. Application via ASBA or UPI: 

Applying for SME IPOs is done through:

• ASBA (Application Supported by Blocked Amount)
• UPI-based IPO application.
• The application amount remains blocked in the bank account until allotment.

5. Retail Category Limit: Retail investors typically apply within the application limit of up to ₹2 lakh (as per IPO rules).

Benefits of Investing in IPO with Pocketful

When investing in an SME IPO, it's not enough to simply apply; it's crucial to have a platform that makes the entire process easy and streamlined. Pocketful makes this experience simple and reliable.

Effortless and Fast Application Process: Applying for an SME IPO can be completed in just a few steps. The IPO section is designed in a clear and organized manner, making it easy to understand price bands, lot sizes, and important dates.

Complete Information in One Place: Before investing in any SME IPO, it's crucial to review the necessary data. Pocketful provides key IPO information on a single screen, making it easier to make decisions.

Secure and Regulatory Process: IPO applications are processed using SEBI's ASBA and UPI systems. Your funds are blocked with the bank until allotment, ensuring a transparent and secure process.

Timely Updates and Clear Status: You can easily track the entire status of the IPO from opening to allotment. This eliminates the need to repeatedly search for information on different platforms.

Digital and Paperless Experience: The entire process is online. No physical forms or additional formalities are required. This feature is especially useful for investors who want a fast and simple process.

How to Apply for an SME IPO?

Applying for an SME IPO is a simple process. You can apply in two ways:

1. UPI Method
2. Net Banking ASBA Method

Method 1: How to Apply for SME IPO through UPI?

Step 1: Login

Open Pocketful's website or mobile app and log in to your account.

Step 2: Go to the IPO Section

Click on the "IPO" section in the dashboard and select the active SME IPO.

Step 3: Understand Issue Details

• View Price Band
• Check Lot Size
• Understand Minimum Investment Amount

SME IPOs have larger lot sizes, so the investment amount may be higher than for mainboard IPOs.

Step 4: Enter Bid

• Select Lot Quantity
• Enter Bid Price
• Enter Your UPI ID

Step 5: Approve UPI Mandate

You will receive a mandate request on your UPI app (such as BHIM, Google Pay, PhonePe, etc.).

Approve it.

Step 6: Application Complete

Once the mandate is approved, your application will be successfully submitted. The funds will remain blocked in your bank account until allotment. Upon receiving the allotment, the shares will be directly credited to your Pocketful Demat account.

Method 2: Apply SEM IPO through Net Banking (ASBA)

ASBA (Application Supported by Blocked Amount) is a secure process in which the application amount is blocked in your bank account.

Step 1: Login to Net Banking

Login to your bank's net banking (where ASBA facility is available).

Step 2: Select IPO / ASBA Option

Go to the IPO or ASBA section and select the relevant SME IPO.

Step 3: Fill in the application details

• Investor category (Retail)
• Lot size
• Bid price
• Your PAN number
• Your Pocketful Demat account number (enter correctly)

Incorrect Demat account details may cause allotment problems.

Step 4: Submit

After submitting the application, the amount will be blocked in your bank account.

Step 5: After Allotment

• Upon receipt of the allotment, the shares will be credited to your Pocketful Demat account.
• If the allotment is not received, the amount will be automatically unblocked.

How to Check SME IPO Allotment Status?

Checking the allotment status of SME IPO is straightforward and simple.

Visit the Registrar's website

• Every IPO has a Registrar.
• Visit the Registrar's official website.
• Select the relevant SME IPO.
• Enter your PAN/Application Number/DP Client ID.
• Submit.

Here you will immediately know whether shares have been allotted or not.

You can also check the exchange website.

You can also check the allotment status on these platforms:

• BSE SME
• NSE SME

How will you find out on Pocketful?

If you applied through Pocketful, shares will be credited to your Demat account before listing if you receive an allotment. As soon as the shares are credited to your account, they will appear in your holdings. This will make it clear to you that you have received an allotment. If you don't receive an allotment, your blocked amount is automatically unblocked in your bank account.

Difference Between IPO and SME IPO

SME IPO Investment Risks & Considerations

Investing in SME IPOs brings both opportunity and responsibility. While small, developing companies offer growth potential, it's equally important to understand certain practical risks. Before investing, consider the following points.

Liquidity Risk: Trading volumes in SME shares may be lower than those of mainland companies. This means that it may sometimes be difficult to find a buyer or seller immediately. Price movement after listing may be faster, but liquidity may remain limited.

Business Risk: SME companies are often in their expansion phase. Their business models are still developing, so market competition, cash flow management, or operational challenges can quickly impact their performance.

Price Volatility: Measures may experience relatively higher volatility after listing. Due to low liquidity and limited public participation, prices can fluctuate rapidly.

Limited Public Information: SME companies have less public visibility than mainboard companies. Although all required disclosures are made in accordance with exchange regulations, market research data may be limited.

Higher Capital Requirement: SME IPOs tend to have larger lot sizes. This means the minimum investment amount may be higher. Therefore, it is important to assess your capital and risk appetite before investing.