IPO and SME IPO Advisory — from board resolution to listing bell

 Main-Board IPOs list on BSE and NSE under SEBI ICDR Regulations with institutional participation, and more stringent eligibility norms (like average operating profitability of INR 15 cr. in last 3 years). SME IPOs list on BSE SME or NSE Emerge with relaxed eligibility, smaller issue sizes (typically INR 20 cr. to 100 cr.), and mandatory market-making for three years. SME IPOs can migrate to the Main-Board after 3 years and subject to meeting the migration eligibility criteria.

SEBI has prescribed a minimum IPO application size of ₹2 lakh for SME IPOs (substantially higher than the ₹15,000 for Main-Board). However, there is no prescribed minimum or maximum issue size in absolute terms, but market practice places most SME IPOs between ₹20 cr and ₹100 cr. For Issue Size above ₹150 cr, Main-Board becomes the recommended choice due to better liquidity mechanism.

Yes. Both BSE SME and NSE Emerge require a SEBI-registered merchant banker as the lead manager to the issue. We work with a number of merchant-bankers and can guide you in selection and manage the relationship through the IPO.

Typically SME IPO process takes 9-12 months period including advisory, preparation of restated financials, DRHP filing and approvals etc. Post approvals, IPO is opened subject to the market conditions.

 Yes. SEBI allows migration to the Main-Board subject to the company meeting the migration eligibility criteria — paid-up capital, post-issue capital, profitability and shareholder-base thresholds. Several of our advised SMEs have executed successful migrations after 3 years post their SME listing.

Minimum EBITDA should be minimum INR 1 cr. for 2 out of 3 latest financial years preceding the application date of SME IPO.

Minimum Promoter contribution i.e. 20% of Post Issue Capital would be locked in for 3 years from the date of allotment in the SME IPO.

Excess of Minimum Promoter contribution shall now be gradually released in 2 years by way of 50% each year, post allotment in SME IPO.

 The entire pre-issue capital held by persons other than the promoters shall remain Locked in for 1 year from the date of allotment in the IPO.

 The minimum number of application amount in SME IPO is INR 2 Lacs comprising of minimum 2 lots.

The minimum offer to public in SME IPO is 26.25% (including the mandatory 1.25% Market Maker portion).

 The minimum number of allottees in SME IPO should be at least 200.

 No, now the repayment of Promoter / Related Party Loans is prohibited in SME IPO

 SME IPO takes approx. 9-12 months subject to fulfilment of statutory requirements and readiness of the promoters and capital markets.

: SME IPO Company can migrate to migrate to mainboard via two routes i.e., Voluntarily and under Regulation 280 of SEBI (ICDR) Regulations 2023

It is now clarified that where the paid up capital is likely to increase beyond INR 25 cr, due to fresh issue of shares, the issuer may undertake such increase in capital subject to meeting Main board compliances including Corporate Governance and Quarterly results.

 An independent monitoring agency is required in SME IPO where Fresh Issue Size exceeds INR 50 Cr.

 An independent monitoring agency is required in SME IPO where Fresh Issue Size exceeds INR 50 Cr.

The OFS in SME IPO is now restricted to 20% of total Issue Size and also selling shareholders cannot sell more than 50% of their pre issue shareholding on fully dilutive basis.

The GCP amount in SME IPO shall now be restricted to 15% of Fresh Issue size or Rs. 10 crore (whichever is lower).

 An additional criterion of positive Free cash flow to Equity (FCFE) for at least 2 out of 3 financial years preceding the application has been introduced w.e.f. 1st September 2024 for all SMEs desirous of listing its securities on NSE Emerge.

Revised FCFE definition w.e.f. 1^st April, 2026

FCFE = Cash flow from Operations – Purchase of Fixed Assets + Proceeds from issuance of Capital + Net Borrowings- Interest*(1-t)

Source : https://nsearchives.nseindia.com/content/circulars/SME73818.pdf

2025 has been a reset year for India’s SME IPO market — issue volumes moderated after 2024’s record run, but the average issue size grew to about INR 45 cr., as larger, better-prepared SMEs came to market. Fundraising remained robust, driven by stronger fundamentals, sharper investor scrutiny, and SEBI’s tighter eligibility norms introduced in March 2025. The overall tone has shifted from listing gain to fundamental quality for long term (exuberance to quality and discipline), signalling a more mature ecosystem on both NSE Emerge and BSE SME.

NSE Emerge and BSE SME are the two dedicated SME exchange platforms in India, operated by the NSE and BSE respectively. Both follow SEBI’s ICDR Regulations, have broadly similar eligibility criteria, and allow migration to the main board after meeting stipulated conditions and 3 year period. There are few differences between the eligibility criterion like NSE Emerge ask for positive FCFE in 2/3 years whereas there is no such requirement by BSE SME. The choice usually depends on the issuer’s advisor, sector, and target investor base

Retail, HNI and Institutional investors all can invest in an book built SME IPO. Whereas in a fixed price issue, Retail and HNI investors participate without any institutional investors. SME IPOs carry a higher minimum application size than mainboard IPOs — minimum 2 lots amounting to ₹2 lakh — which is designed to restrict participation to more informed investors given the relatively higher risk profile. Post the March 2025 SEBI reforms, minimum application thresholds and shareholder requirements have been further tightened to strengthen investor protection.

There is no fixed minimum paid-up capital prescribed by SEBI for SME IPO eligibility, but the post-issue paid-up capital must not exceed ₹25 crore — beyond this threshold, the company is required to list on the mainboard instead. Most SME issuers come to market with post-issue paid-up capital in the ₹5–25 crore range, alongside additional eligibility norms around net tangible assets, track record, and positive operating profit in recent financial years.

A typical SME IPO takes around 9–12 months from the appointment of the merchant banker to the listing day. This includes due diligence and DRHP preparation, in-principle approval from NSE Emerge or BSE SME, the public issue period, allotment, and listing formalities. Timelines can stretch if the company’s financials, corporate housekeeping, or regulatory filings require clean-up before filing.

 Yes. Migration is mandatory once the company’s post-issue paid-up capital crosses ₹25 crore. It is also voluntary after at least three years of listing on the SME platform, provided the company meets mainboard eligibility criteria — including a paid-up capital of at least ₹10 crore, Turnover of ₹100 crores and Operating profit of ₹10 to 15 crores and a minimum number of public shareholders. Migration unlocks wider investor participation and better liquidity.