SME IPO Boom: 2024’s High-Gain Listings and What Fueled Them

In 2024, India's capital markets witnessed a remarkable surge in SME IPO’s, marking a transformative period for small and medium enterprises seeking public funding. With a record-breaking number of listings and substantial investor interest, the SME IPO boom not only highlighted the sector's potential but also underscored the evolving landscape of SME financing in the country.

A Record-Breaking Year for SME IPO’s

The year 2024 saw an unprecedented number of SME IPO listings, with 243 companies debuting on platforms like BSE SME and NSE Emerge, a significant increase from the 179 listings in 2023. This 35.8% year-on-year growth reflects the burgeoning confidence of SMEs in tapping public markets for capital.

Notably, 223 out of these 243 SME IPOs delivered positive listing day gains, with 173 still trading above their issue prices by year-end. This translates to a nearly 90% success rate, indicating robust investor appetite and the strong performance of these enterprises post-listing. 

High-Gain Listings: Standout Performers

Several SME IPOs stood out for their significant and exceptional performance that resulted in exponential returns. For instance, Rajesh Power Services' IPO was listed at price ₹636 per share against a cut-off price of ₹335 on the BSE platform, consistently providing investors with significant gains. 

Similarly, Teerth Gopicon Limited's stock soared over 226%, rising from ₹111 issue price to ₹362 at the current market price, showcasing the immense potential within the industrial sector.

Some other SME IPO shares that mark their significant potential in 2024:

Indian Emulsifiers: Offered a 242.05% gain, listing at ₹451.50 against an IPO price of ₹132.

Esconet Technologies: The company share represented a 227.98% return, surge having a listing price of ₹275.50 against an IPO price of ₹84.

Shivalic Power: Delivered a 226.55% gain, listing at ₹326.55 compared to an IPO price of ₹100.

These high-gain listings not only rewarded investors but also set benchmarks for future SME IPOs, attracting more attention to the sector.

SME IPO Market Trends in 2024

In the initial months of 2024, SME IPOs continuously outperformed mainboard IPOs and were doing great in terms of deal count and investor participation. For example, in January 2024, 20 SME IPOs raised ₹880 crores, even as most effective 6 mainboard IPOs raised ₹4,845 crores. February showed similar patterns with SME IPOs elevating ₹930 crores from 20 issues as compared to a few mainboard IPOs raising ₹10,878 crores. In the period of initial and early March, SME IPO momentum endured notwithstanding almost no mainboard interest and that emphasized the resilience of the SME segment.

Cumulatively, in 2024 year-to-date, there were ~240 SME IPO issues raising ₹8,761 crore, highlighting robust growth and investor appetite in this segment.

The Unprecedented Growth of SME IPOs

The year 2024 has emerged as the most successful year yet for SME listings. Let’s look that how this space has grown over the years:

Current Scenario in SME Landscape

The Indian capital markets experienced a significant surge in SME IPOs during FY24-FY25, with 163 out of 242 public issues attributed to small firms, as per NSE data.  This increase became characterised by using high investor interest and large listing gains, with numerous businesses turning in multibagger returns. However, the fast growth also raised issues concerning regulatory oversight and the requirement for stricter compliance measures.

The Securities and Exchange Board of India (SEBI) spoke back with the aid of featuring tighter guidelines for SME IPOs. These included growing the minimal application issue size for investors, putting profitability standards for issuers, and restricting the portion of shares sold by way of present shareholders. SEBI also initiated investigations into positive service provider bankers for alleged malpractices in dealing with SME IPOs.

Despite these challenges, the SME IPO segment presented resilience, with many companies persevering to draw investor interest and obtain successful listings. The tendencies of 2024 underscore the significance of balancing growth possibilities with robust regulatory frameworks to make certain the long-term sustainability of the SME capital market.

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Why Are SME IPOs Booming?

Beneath the rapid-fire headlines, several deep currents fueled the SME IPO boom of 2024. One was the shift in SME financing philosophy: Indian small and medium enterprises increasingly turned to equity capital markets for growth funds instead of relying on traditional debt.

Several factors demonstrated the SME IPO surge in 2024, even as the mainboard segment slowed down.

1.   Appetite for High-Growth Potential

SMEs are seen as nimble, growth-oriented players, often operating in emerging sectors. For investors — especially those from Tier 2 and Tier 3 cities — these companies present a unique opportunity to ride India’s next wave of entrepreneurial success.

2.  Simple Listing Requirements

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Compared to mainboard IPOs, the SME IPO listing requirements and regulatory norms  are not much complex in nature. Lower entry barriers have enabled a broad spectrum of businesses to raise funds and list publicly, democratizing access to capital markets.

3.  Regulatory Support

SEBI’s recent reforms have introduced some sort of flexibility and put scrutiny. While the SME platform is more accessible, regulations now mandate stricter profitability requirements and limit Offer-for-Sale (OFS) volumes. This ensures more credible offerings reach the public, improving investor trust.

4.   Listing Gains & Retail Interest

The majority of SME IPOs in 2024 delivered stunning and significant listing-day gains. This trend, combined with social media buzz and local investor networks, drew in more retail investors — especially from non-metro areas — fueling a virtuous cycle of demand.

5.   Mainboard IPO Slowdown

Bigger companies delayed listings due to valuation concerns and macroeconomic uncertainty. Investors, in turn, grew cautious about large IPOs, seeking better returns in smaller, more dynamic firms.

Sectoral Trends in SME Space

One other fruitful fact from reviewing 2024’s SME IPO listings performance is the remarkable diversity of outperformers. While technology, infrastructure, and renewable energy hogged the headlines, sectors like consumer food, healthcare, and even textiles made a splash. Taking instances from listed SME, consumer foods SME in this space  HOAC Foods India and organic chemical maker Medicamen Organics Ltd. these SME companies reflected outsized returns, courting investors looking for India’s next retail or pharma success story.

Several SME IPOs delivered extraordinary returns, capturing investor attention. Owais Metal and Mineral Processing Limited yielded gains upward of 600%, benefiting from strong fundamentals in the metals sector.

Renewable energy achievers like Australian Premium Solar (India) Limited and Alpex Solar Limited delivered superb returns, between 400% to 700%, reflecting market enthusiasm for green energy.

Is it all Sustainable? - The Flip Side of the Boom

The rapid surge in SME IPOs during 2024 certainly made headlines, with some stocks delivering multibagger returns. But not everything glittered for long. As Trivesh D rightly points out, volatility is deeply woven into the fabric of SME IPOS in India.

Take another example, Varanium Cloud, where its stock soared and surged significantly  from ₹40 to ₹373 before crashing to just ₹15. and Rachana Infrastructure, which climbed from ₹184 to ₹1,250 only to fall back to ₹84. These wild swings often mask weak business fundamentals and can trap retail investors who enter at peak prices expecting the rally to continue. It's a sharp reminder that while the latest SME IPO and upcoming SME IPOs may offer upside, due diligence is crucial.

Conclusion

The SME IPO segment presented significant growth during and even over the years, moreover experienced a substantial boom in 2024, propelled by a combination of regulatory support, widening investor base, and investor preference for growth-oriented smaller firms. Despite challenges and concerns in the mainboard market, several shortcomings arise and can be seen yet  SMEs have emerged as key drivers of market activity, capital formation, and investment opportunities in India’s primary market. 

But beneath the surface of success lies a warning: without strong fundamentals and sustainable business models, these gains may be short-lived. As we head into 2025, the promise of upcoming SME IPOs remains strong, but investors must pair optimism with caution, and momentum with mindful analysis. 

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