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Once a niche market with limited participation, the SME IPO sector has seen a dramatic rise in retail interest. Four years ago, the average SME IPO attracted less than 500 applicants. Fast forward to FY25 and that number has skyrocketed to an astonishing 2,19,000 applications.
Ordinary retail investors, previously hesitant to invest in high-risk small and medium enterprises (SMEs) are now flocking to these IPOs, previously dominated by high-net-worth individuals (HNIs). The motivation? Exceptional listing gains that these IPOs have recently delivered. Data highlights the stark contrast: from an average of just 408 applicants per IPO in FY20 and 511 in FY21, the numbers have surged to over 2,19,000 in FY25.
Even with the inherent risks and a minimum investment requirement of ₹1 lakh, the number of applicants continues to climb. "In bullish markets, investors are inclined to participate in all IPOs, aiming for allotments due to the potential for significant listing gains," says Pranav Haldea, Managing Director of PRIME Database Group. The emergence of trading apps has further simplified the IPO investment process, allowing investors to apply with just a few clicks, while keeping their funds in their bank accounts until the allotment, making the process even more appealing.
The average listing gain in FY25 is a remarkable 76%, with some IPOs—like Hoac Foods India, Medicamen Organics, Koura Fine Diamond Jewelry and Maxposure—seeing their retail portions oversubscribed by more than a thousand times. Retail interest in SME IPOs began to surge in FY23, driven by notable rallies in some issues and substantial listing gains. The average number of applications in FY22 was 6,042, with listing gains of 19%. This upward trend continued in FY23, where applications averaged 31,500 and listing gains rose to 29%. By FY24, the average listing gains surpassed 50% and the number of applications per IPO jumped to 113,000.
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