The SME IPO Handbook · Chapter 2 of 12
SME vs Mainboard IPOs
Size and eligibility
Mainboard issues are by larger, more established companies and require a bigger track record and net worth. SME issues come from companies with a smaller post-issue capital and a shorter, lighter track-record requirement.
Minimum application
An SME lot is worth far more than a mainboard lot, typically ₹1 lakh or more per lot, and bidders usually have to apply for at least two lots. The exact application rules are in each prospectus.
Worked example: lot size 1,200 shares at an issue price of ₹90 means one lot costs ₹1,08,000. A minimum application of two lots would be ₹2,16,000, which is why SME issues need a larger cheque than mainboard issues.
Trading rules
SME shares trade in lots, have different price bands from mainboard shares, and are subject to special settlement rules in the early period after listing.
Liquidity and disclosure
SME stocks trade in smaller volumes, so selling a large position can move the price. Disclosure norms are lighter, for example half-yearly rather than quarterly reporting in the early years.
Who the typical applicant is
Because of the larger minimum, retail participation is smaller than in mainboard issues and the non-retail categories (HNI and institutional) often dominate. That shapes both subscription numbers and listing behaviour.
Key takeaways
- SME lots are worth around ₹1 lakh or more.
- Liquidity is thin, which magnifies moves.
- Reporting frequency is lower than for mainboard companies.
- Check each prospectus for the exact application rules.