IPOPlatform Blogs

The Main Board and SME IPOs cater to different types of companies with varying needs and stages of development. Main Board IPOs suit larger, established companies, while SME IPOs are designed to help smaller, emerging businesses access public capital markets.

Merchant bankers play a pivotal role in supporting SMEs in India by facilitating fund-raising through IPOs, debt issues, and private equity. They manage the entire IPO process, from due diligence to post-IPO market making, ensuring regulatory compliance and fair valuations. Beyond IPOs, they assist with loan syndication, private equity, corporate finance advisory, and asset management. This comprehensive support makes merchant bankers essential partners for SMEs aiming to expand and optimize financial resources.

In a Draft Red Herring Prospectus (DRHP), the details regarding promoters and the promoter group are crucial for compliance with SEBI (ICDR) Regulations, 2018. This information helps investors assess the company’s leadership, credibility, and track record, which are vital for attracting investment. Merchant bankers in India play a significant role in effectively presenting this information, ensuring regulatory adherence while enhancing investor confidence. A clear understanding of promoters and their groups is essential for the success and valuation of SME IPOs. 

To list on the BSE SME Exchange, a company must meet stringent requirements under the Companies Act 1956/2013. These include maintaining a post-paid up capital not exceeding ₹25 crore, a net worth of at least ₹1 crore for the last two years, and net tangible assets of ₹3 crore in the previous financial year. Additionally, the company must have a track record of at least three years, or receive project funding from approved institutions. Compliance with listing norms is essential for a successful SME IPO listing.

To list on the NSE SME Exchange, a company must comply with the Companies Act 1956/2013. The post-issue paid-up capital should not exceed ₹25 crore, and the company must have an operational history of at least three years. Promoters must hold at least 20% of post-issue share capital. Key financial requirements include positive net worth, operating profit for two out of three years, and a new Free Cash Flow to Equity (FCFE) criterion, introduced in 2024 for SME IPO applicants.

An IPO subscription is the process where investors apply to purchase shares during a company’s Initial Public Offering. The subscription levels reflect the demand for the IPO, influencing the listing price and the allocation chances for investors. Platforms like NSE and BSE provide real-time subscription data, allowing investors to gauge interest and refine their investment strategies for informed decision-making throughout the IPO process.

Oversubscription occurs when an IPO’s demand surpasses the available shares, signaling robust investor interest and often resulting in higher listing prices. Allotment is typically conducted via a lottery system. Conversely, undersubscription indicates weak demand, with applications falling short of available shares, which can lead to cancellation if the minimum subscription threshold (90%) isn’t reached. Both situations provide important insights into market sentiment, investor confidence, and the perceived value of the company during the IPO process.

Investing in an IPO involves understanding the different investor categories such as QIBs, NIIs/HNIs, RIIs, and Anchor Investors, each with distinct quotas and criteria. Whether you’re a retail investor or an institutional player, choosing the right category based on eligibility and investment amount is key. Explore how these categories work, their quotas, and what makes each unique to assist in informed decision-making .

The Price-to-Earnings (P/E) ratio is a key metric for assessing stock valuation, comparing a company’s share price to its earnings. Widely used in IPO valuations, it helps investors gauge if a stock is overvalued or undervalued, enabling peer comparisons and understanding market expectations. P/E ratios vary by industry, with high P/E indicating growth potential or overvaluation, while low P/E suggests undervaluation or limited growth potentia