Investing in an IPO gives you the opportunity to become part of a company’s journey from day one. While many investors are familiar with mainboard IPOs, SME IPOs are also gaining traction, especially among those looking to support fast-growing small businesses.
So what’s the difference between SME and mainboard IPOs, and which one might be the better choice for you?
What is an SME IPO?
SME IPOs are launched by small and medium-sized enterprises that want to raise funds from the public. These businesses are typically in an early growth stage and have a post-issue capital between ₹1 crore and ₹25 crore.
Key features of SME IPOs:
- Listed on platforms like BSE SME or NSE EMERGE, designed for growing small businesses.
- Faster listing process, usually within 3 to 4 months
- Approved by the stock exchange, not SEBI
- Minimum investment amount is typically around ₹1,00,000
- Lower liquidity, so selling shares may take more time.
- Market making is mandatory to ensure some level of trading activity for at least 3 years
SEBI has recently stepped in with tighter rules to make things safer and more transparent for investors. Companies must now meet profitability requirements, limit the amount promoters can sell, and follow tighter rules on how IPO funds are used.
What is a Mainboard IPO?
Mainboard IPOs are for larger, more established companies with post-issue capital of at least ₹10 crore. These IPOs get listed on major stock exchanges like NSE and BSE, and because of the company’s size and reputation, they usually draw more attention from both everyday investors and large institutions.
Key features of Mainboard IPOs:
- Approved and regulated by SEBI
- Minimum investment usually starts at ₹10,000 to ₹15,000
- Approval process takes longer, around 6 months
- High liquidity, which makes buying and selling shares easier
- No market making requirement due to strong trading volumes
Which One Should You Choose?
- If you are open to higher risk, can invest at least ₹1,00,000, and are excited about supporting early-stage businesses, SME IPOs could be a rewarding choice.
- If you prefer more stability, better liquidity, and lower entry points, mainboard IPOs may be the safer and more accessible option.
Both offer valuable opportunities. It all depends on your investment style, financial goals, and comfort with risk. There is no one-size-fits-all answer. Take the time to evaluate the business, understand its fundamentals, and align your choice with your risk tolerance.
Smart investing starts with informed decisions.