Myth vs. Reality: Are SME IPOs Only for Big Businesses?
❌ Myth: "SME IPOs are only for big businesses."
✅ Reality: "Even companies with ₹10 Cr revenue can list and raise funds. Here's how!"
When we talk about Initial Public Offerings (IPOs), most small and medium enterprises (SMEs) assume that going public is an option only for large corporations. This misconception often prevents promising businesses from tapping into the incredible benefits of stock market fundraising. However, the reality is quite different—SMEs with a turnover as low as ₹10 crore can list on platforms like NSE Emerge and BSE SME to raise growth capital. Let's explore how.
Understanding SME IPOs
An SME IPO allows small and medium businesses to raise capital by offering shares to the public. These IPOs are conducted through platforms specifically designed for SMEs, such as NSE Emerge and BSE SME, which have more relaxed eligibility criteria compared to the main board.
Eligibility Criteria for SME IPOs
Contrary to the myth, an SME doesn't need massive revenues to qualify for an IPO. The general eligibility requirements are:
- Minimum Post-Issue Paid-Up Capital: ₹1 crore
- Track Record: At least 3 years of operations
- Profitability (Optional): SEBI does not mandate profitability, but a solid financial history strengthens the case.
- Net Tangible Assets: Typically, a minimum of ₹1.5 crore
- Number of Shareholders: At least 50 shareholders post-IPO
Even if your SME has modest revenues, a strong growth story and business potential can make your IPO successful.
Why Should SMEs Consider an IPO?
Listing on the SME exchange brings several advantages:
- Access to Growth Capital: Raise funds without the burden of debt.
- Brand Credibility & Market Visibility: Being a listed entity increases trust among stakeholders.
- Liquidity for Investors & Founders: Shares become tradable, offering an exit route for early investors.
- Employee Motivation: ESOPs can be introduced to attract and retain talent.
Case Study: A ₹10 Cr Revenue Company Goes Public
Consider a mid-sized manufacturing company with ₹10 crore in revenue. Initially bootstrapped, the business struggled with scaling due to limited funds. By launching an SME IPO, they raised ₹15 crore, expanded operations, and secured large contracts. Post-listing, their valuation doubled, and they even transitioned to the main board within a few years.
How to Get Started with an SME IPO?
- Engage a Merchant Banker – A registered merchant banker will guide you through the IPO process.
- Prepare Documentation – Draft a prospectus, financial reports, and compliance documents.
- SEBI & Exchange Approval – Get regulatory approvals from NSE Emerge/BSE SME.
- Marketing & Roadshows – Promote the IPO to potential investors.
- Go Public & List Your Shares – Once the IPO is complete, your SME enters the stock market.
SME IPOs are not just for big businesses! Even SMEs with ₹10 crore in revenue can leverage this opportunity to raise funds, gain credibility, and scale their business. If you're an SME looking for expansion capital, don't let myths hold you back—explore the world of SME IPOs today!
Rudra Garg, IPO & Capital Markets Specialist
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