SME IPO market revives but listing gains lose sheen

…Market participants attributed this to tighter regulatory scrutiny, higher investor loss ratios and growing resistance to aggressive valuations. Puneet Singhania, Wholetime Director, Master Capital Services, said exchanges have raised the bar to curb speculation, tightening entry norms as enthusiasm for riskier SME issues grew and setting stricter size and profitability tests for companies seeking to move up to the mainboard. While some SME IPOs have delivered strong debuts, with a few listings at close to twice their offer price, performance across the segment has been uneven. About half of the SME companies listed this year are trading…

…Retail interest Kresha Gupta, Director and Fund Manager, Steptrade Capital, said investors continue to be attracted to SME IPOs by the opportunity to participate in businesses at an early stage of their listed journey. Retail liquidity has also increasingly moved towards primary markets. Investors sold shares worth ₹5,674 crore in the secondary market during July and August, while putting around ₹12,618 crore into IPOs , Gupta said. The SME platform is also continuing to provide a pathway for companies to graduate to the mainboard. Nearly 31 companies migrated to the mainboard in 2026, compared with 30 in 2025, despite stringent…

…both exchanges, Gupta said. Pankaj Agrawal, Director, Valmiki Leela Capital, said 23 of the 30 SME IPOs listed early this year opened below their issue price, while the average listing gain was only around 3 per cent. “ The focus is gradually moving beyond listing-day gains to the company’s valuation, earnings and growth potential ,” Agrawal said. Anchor investments in SME IPOs rose from about ₹131 crore in FY23 to ₹2,204 crore in FY25, although mutual funds have remained selective because of smaller issue sizes and limited liquidity in several…