SME IPOs Are Raising Less Funds, But Average Issue Sizes Are Rising

NSE Emerge, the exchange's platform for small and medium enterprises, saw 39 listings raise Rs 2,305 crore in the first half of FY27. A year earlier, 68 listings had raised Rs 3,372 crore. Proceeds fell about 32 per cent, and the number of issues fell 43 per cent. The average issue rose to roughly Rs 59 crore from Rs 50 crore, a gain of about 19 per cent, according to NSE's Market Pulse for October 2026.

Since the platform opened, 760 companies have raised Rs 24,532 crore, with a combined market capitalisation of Rs 2.8 lakh crore at the end of September. Maharashtra, Gujarat and Delhi account for 506 of those listings and Rs 15,841 crore of the money raised.

Average SME IPO Size Has Risen Steadily

The increase in average issue size has been a gradual trend rather than a recent development. NSE’s data show that the average issue size rose from Rs 10 crore in FY21, when eight companies raised Rs 79 crore, to Rs 33 crore in FY24, Rs 44 crore in FY25 and Rs 48 crore in FY26.

The number of listings, however, has not followed the same trajectory. Listings increased from 138 in FY24 to 163 in FY25, when companies raised Rs 7,111 crore. In FY26, the number fell to 111, while fundraising declined 25 per cent to Rs 5,363 crore.

The first half of FY27 has extended this trend, with fewer companies accessing the market but the average issue size reaching nearly six times its FY21 level.

Did Tighter SME IPO Rules Contribute To This Slowdown

In December 2024, Sebi’s board approved stricter eligibility and disclosure requirements for SME IPOs. NSE subsequently informed Emerge issuers that the revised criteria would apply to draft offer documents filed from December 19, 2024. The regulations were notified on March 4, 2025.

The revised framework capped the offer for sale at 20 per cent of the issue and restricted selling shareholders from selling more than half their holdings. It also limited the use of IPO proceeds for general corporate purposes to 15 per cent of the issue or Rs 10 crore, whichever is lower, and prohibited the use of proceeds to repay promoter loans.

Other changes included a profitability requirement, a minimum application size of two lots and public comments on draft offer documents. The profitability test requires operating profit of at least Rs 1 crore in two of the preceding three financial years.

What Comes Next

Sebi proposed an overhaul of SME IPO rules through a consultation paper dated October 14, 2026. The proposals seek to improve issuer quality and investor protection while making it easier for companies to raise capital.

Under the proposal, eligibility would be determined by post-issue market capitalisation rather than paid-up capital. Companies valued at up to Rs 1,000 crore would have to list on the SME platform, while those valued between Rs 1,000 crore and Rs 4,000 crore could choose between the SME platform and the Main Board.

The proposed profitability requirement would also become stricter. Companies would need an average operating profit of at least Rs 3 crore a year over the preceding three years, compared with the existing minimum of Rs 1 crore in two of the last three years.

A separate eligibility route would be available to issuers that allot at least 75 per cent of their issue to qualified institutional buyers (QIBs).

At the same time, the minimum application size would be reduced from Rs 2 lakh to Rs 1 lakh. The proposed framework would remove the Rs 10 crore cap on general corporate purposes while retaining the 15 per cent limit.

Sebi has also proposed removing compulsory market making and the minimum inventory requirement of 5 per cent of listed securities.

The proposals aim to reduce issuance-related costs, widen investor participation and facilitate capital formation. However, they remain subject to public consultation and final regulatory approval.

Consumer Discretionary And Healthcare Gain Share

The sectoral composition of SME fundraising has also changed. Consumer discretionary companies accounted for 36.2 per cent of fundraising in the first half of FY27, compared with 25.2 per cent in FY26, according to NSE’s sectoral data.

Healthcare’s share increased from 4.9 per cent to 21.5 per cent over the same period. Industrials, which accounted for 35.6 per cent of fundraising in FY26, saw their share decline to 29.3 per cent. Information technology’s share fell from 8.8 per cent to 2.4 per cent.

Issue sizes also varied during the half-year. In September, 12 companies raised Rs 538 crore, translating into an average issue size of around Rs 45 crore. Individual issues ranged from Rs 22 crore to Rs 56 crore.

The September average was below the half-year figure of Rs 59 crore, indicating that larger issues earlier in the period helped lift the overall average.

28 Per Cent Of SME IPOs Open At Over 50 Per Cent Premium

In the September quarter, 28 per cent of 25 SME IPOs opened more than 50 per cent above their issue prices, compared with 7 per cent of 14 listings in the June quarter. Another 44 per cent of the September-quarter listings opened within 10 per cent of their issue prices.

NSE measures listing gains using the opening price rather than the closing price on the first day of trading.

In September, Shanti Inorganics and SpectraA Technology Solutions each opened 90 per cent above their issue prices. Qualiance International gained 77.1 per cent at the open, while Ashutosh Fibre opened 52.2 per cent higher. ABH Healthcare, in contrast, opened 2.9 per cent below its issue price.