For India, SMEs have become a boon to the economy. SMEs drive the majority of the employment, innovation, and create value in the local markets. To help them grow, an SME IPO is a great way to raise capital and boost their visibility through a public listing. Whether it’s an SME IPO on BSE SME or NSE Emerge, the process is well-structured and requires no heavy compliance.
To help you get a deeper understanding of the SME IPO eligibility process, this blog covers everything you need to know in 2025. In case you are looking for SME IPO consulting services in Mumbai, you can reach out to us.
What is an SME IPO?
An SME IPO is issued by SMEs (Small and Medium Enterprises) with a post-issue paid-up capital of up to ₹25 crores. Access to the public equity markets is offered through platforms like NSE Emerge or BSE SME, without the burden of complex mainboard listings.
So, SME IPOs are beneficial and suitable for firms that are quite mature to be listed, but not eligible to qualify for the main board. This listing helps them to improve their credibility, liquidity, investor visibility, and brand recognition.
SME IPO vs Main Board IPO
An SME IPO is especially designed for small businesses, for which post-issue paid-up capital is up to ₹25 crores. The listing process is simpler and is listed on platforms like NSE Emerge or BSE SME. Whereas, main-board IPOs are the IPO of large companies with a paid-up capital of at least ₹10 crores. Here, the threshold of shareholders is higher with rigorous compliance, documentation, and reporting. Usually, the cost of an SME IPO in India ranges between 50 lakhs to crores, depending on the size of the issue and services used by the issuing company. If you wish to know the exact cost, it is better to take an IPO consultation from experts like yourCFO and ensure a smooth journey.
SME IPO Eligibility Criteria
- As a business, the post–issue paid-up capital should be a minimum of ₹3 crores, not more than ₹25 crores.
- You must have a track record of at least 3 years, or be a predecessor entity.
- EBITDA should be ≥ ₹1 crore in any 2 years of the 3 financial years.
- Promoters should have ≥ 3 years of experience and must hold ≥ 20% of post-issue paid-up capital.
- In the recent period, there should be a positive net worth and free cash flow to equity.
- OFS should be capped at 20% of issue size. There shouldn’t be any promoter selling more than 50%.
- There should not be any BIFR proceedings, insolvency, or past regulatory violations in the last 3 years.
SME IPO Listing Requirements
- The draft prospectus should be reviewed and approved by the respective exchange (not directly by SEBI).
- Your company must comply with SEBI’s ICDR regulations in the DRHP and all public disclosures.
- 100% of your share issue should be underwritten with mandatory market-making arrangements.
- A minimum of 50 public shareholders is required. Also, the lot size of applications should be at least ₹1 lakh.
- Your company must maintain an active website with a valid demat account or depository agreements. There should not be any changes in promoters in the past 1 year.
- If the IPO size exceeds ₹50 crore, an official monitoring agency must be appointed.
What is the SME IPO Process?
If you have a small or mid-sized business, then here’s a step-by-step process to register for the SME IPO.
- Evaluate financial reports – Before you begin with the process, first analyze and assess your financial reports and ensure that it is IPO-ready. For this, you need to carefully review your corporate governance, financial reports, and verify them as per the eligibility criteria.
- Appoint a merchant banker – You need to appoint a SEBI-registered merchant banker. They will handle the entire due diligence, guide you through the valuation aspect, and assist in drafting a strong DRHP (Draft Red Herring Prospectus).
- File the DRHP with the Exchange Board – After your DRHP is fully ready, submit it to NSE Emerge or BSE SME. The choice depends on where you ideally plan to list. This DRHP will act as an official pitch to the investors.
- Market your IPO issue and conduct roadshows – After submitting the DRHP, plan presentations for your investors, create a pricing strategy, and determine the lot size. This is where you need to interact with your potential investors and present your growth story.
- Investor bidding takes place – At this stage, investors apply for shares via ASBA (Applications Supported by Blocked Amount). This is where the funds will be temporarily blocked in their accounts during the IPO window.
- Shares are allotted – Based on the subscriptions, your company’s shares will be allotted to the investors, and everything, including payments, will be settled at this step.
- Final listing on NSE Emerge or BSE SME – Once all shares are allotted to the investors, your shares will go live on the BSE SME IPO or the NSE Emerge IPO.
- Tick off the SME compliance checklist – This is the last step, where the promoter’s shareholding gets locked in, the underwriting process takes place, and rigorous documentation is required. Any error in this stage will directly impact your IPO journey.
How to Choose the Best SME IPO Consultants in Mumbai?
If you want to list your business on the stock exchange, it is important to have a list of top SME IPO consultants in Mumbai in front of you! The right IPO advisory partner will not only simplify the whole process, but also ensure that you meet all the required compliance. Here’s how you can select the best IPO consulting services:
- Look for Experts in SME IPO Advisory – You must consider IPO consultants in Mumbai who are primarily specialized in SME IPO advisory. They must have a good experience in handling various SME listings on main platforms like BSE SME and NSE Emerge.
- Must offer detailed capital raising solutions – An IPO consultant must provide a complete package of capital raising solutions, like Equity Capital Raising Support, Private Capital Solutions, Corporate Agent Services, Equity Research Solutions, and a lot more. With this, you can just hand over the responsibility and focus on other crucial aspects.
- Proven Track Record – Before you finalize an IPO advisory partner for your business, you must ask for their IPO-related success stories, case studies, and client testimonials. This will give you a reality check and understand where they stand in the market.
- Transparent cost structure – Depending on the issue size and the services involved in the process, IPO costs can vary. To be clear and follow a systematic process, it is vital to go with SME IPO consultants in Mumbai that offer a transparent pricing structure without any hidden charges. The best example is yourCFO.
To know how to list your SME on the stock exchange in India and ensure a smooth process, it is better to outsource an SME IPO consulting firm like yourCFO. We will help you achieve financial excellence with expertise.
