Inside the Frenzy and Fragility of SME IPOs

Despite geopolitical volatility, the demand for SME IPOs refuses to die. But, a froth may be building up

- Neha Joshi & Dipti Sharma

For the longest time, investing in small and medium enterprise (SME) stocks felt like checking into a hotel with no check-out desk. Buying in? Easy. Getting out? Not so much. Liquidity, or the lack of it, kept many investors circling but rarely landing in the SME space.

Many figured if they had to get stuck, it better be in a private, unlisted company. After years of being an overlooked corner of the market, SME listings are now catching eyes and stirring interest among investors.

The post-covid-19 pandemic era ushered in a new generation of investors, more risk-tolerant, less scarred by past market meltdowns. Simultaneously, regulatory tweaks made the SME space more inviting.

And nothing shows the shift better than the steady climb in listing gains.

Numbers Don't Lie

In 2024, SME initial public offerings (IPOs) delivered an average pop of around 60% on debut, a figure that has only been rising over the past five years, according to Prime Database. 240 SME IPOs hit the market during the year, raising ₹8,761 crore, the highest in both number and funds raised since the pandemic.

The frenzy continued into 2025, despite market volatility. Tariff wars between the US and China, geopolitical conflicts in West Asia, as well as the brief India-Pakistan war, played on the minds of investors. While large IPOs are being delayed, downsized, or even shelved, SME IPOs appear to be bucking the trend.

Here's a telling sign of surging investor interest and risk appetite: Between 27 and 30 May alone, six SME IPOs opened for subscription. In May, 13 SME IPOs hit the market, which is more than double the six new listings on the mainboard, data from Prime Database shows.