SMEs have shined since IPO, but experts advise caution

In the past year, SME IPOs have outperformed mainboard firms in listing gains and returns

- Mayur Bhalerao

Mumbai: The public listings of small and medium-sized enterprises (SMEs) have outperformed mainboard companies in terms of listing gains in the past one year as relatively lower free float has caused a surge in prices when demand is disproportionately higher than supply in a structural bull market. However, market experts cautioned investors to take an informed decision while picking SME IPOs and invest only in quality businesses, as a rising tide lifts all boats.

SME IPOs in the past year have outperformed mainboard companies in terms of both listing gains and returns over the past year. They have listed with a median gain of 12.1% on their offer price, compared to 8% for mainboard IPOs. Their median annualized returns since listing is 61%, higher than the 52% for mainboard IPOs. The BSE SME IPO index has also outperformed the BSE IPO index, returning 123% in the past year, compared to 36% for the latter.