SME IPO frenzy: The allure and cost for retail investors

SME IPO fundraising hit record high in 2025, driven by buoyant markets, retail participation

- Jash Kriplani

Record inflows, lighter listing norms and a rush for listing-day gains have made small and medium enterprise (SME) IPOs one of the hottest corners of Dalal Street this year. Yet as retail participation surges and fundraising hits new highs, returns are increasingly uneven—highlighting the risks lurking beneath the frenzy.

The surge in activity is clearly evident from the issuance numbers, with SMEs flocking to the SME platforms of the BSE and NSE to tap the buoyant markets and ample liquidity. According to data from Prime Database, 257 SMEs have raised around ₹10,965 crore in 2025—a record high.

There has been a huge increase in interest from retail investors in this high-risk segment, said Pranav Haldea, managing director of Prime Database, which tracks initial public offering (IPO) activity. “Between 2020 and 2024, the average retail applications in SME segment have gone up from 297 to 1.8 lakh per SME IPO.”

However, strong retail demand has not translated into consistent returns. Of the 250 SME IPOs listed in 2025, 129 are trading below their issue price, data showed. "A large chunk of SME stocks end up trading below issue price within six months to a year,” said Deepak Jasani, independent market expert.

It has been a galore of IPOs on Indian equity markets this year. The 90 IPOs launched so far in 2025 have cumulatively raised ₹1.51 trillion (as of 13 November 2025), only marginally behind the ₹1.59 trillion raised during the entirety of 2024, according to Prime Database.

Lighter rules, higher risk