Recent SME IPOs saw sharp listing gains, quick reversal

RBI study reveals signs of overvaluation in some of these stocks

- SUBRATA PANDA

A study authored by the staff of the Reserve Bank of India (RBI) reveals a trend in recent small and medium enterprises (SME) initial public offerings (IPOs), wherein there are sharp listing gains followed by negative returns within a short period.

This decline is even more pronounced in IPOs that attracted strong interest from retail investors.

‘The inability of many SMEs to sustain positive returns post-listing coupled with sharp listing gains following increased interest from retail investors in these stocks has prompted the markets regulator Securities and Exchange Board of India (Sebi) to initiate regulatory measures aimed at restoring stability in the segment