An Initial Public Offering (IPO) marks the moment when a company sells its shares to the public for the very first time. The funds raised are used to fuel expansion, repay debts, or meet business needs. In India, IPOs can be broadly divided into two types: Mainboard IPOs and SME IPOs.
At first glance, both allow companies to raise capital from the stock market, but they serve very different kinds of businesses. Understanding the difference between Mainboard IPO and SME IPO helps investors make informed choices and ensures companies choose the right route to access capital.
What Is a Mainboard IPO?
A Mainboard IPO is when a larger, privately held company goes public by listing its shares on primary stock exchanges such as the BSE and NSE. These companies are usually well-established and are required to have a minimum post-issue paid-up capital of ₹10 crores.
To qualify for a Mainboard IPO, companies can apply through two regulatory routes set by SEBI:
- Profitability Route– The company must have at least ₹3 crore worth of physical assets over the last 3 years and an average profit before tax of ₹15 crore in any 3 of the last 5 years. Additionally, the IPO size cannot exceed five times the company’s net worth.
- QIB Route– If the company does not meet profitability criteria, it can list by ensuring that at least 75% of the issue is subscribed by Qualified Institutional Buyers (QIBs) through book building.
Some notable examples of recent Mainboard IPOs include Swiggy IPO, Hyundai Motors IPO, and NTPC Green Energy IPO.
What Is an SME IPO?
An SME IPO is designed for small and medium enterprises (SMEs). These businesses often find it challenging to access large funding sources like loans or institutional financing. To support their growth, special SME platforms have been created: NSE Emerge and BSE SME.
For an SME IPO, the post-issue paid-up capital must not exceed ₹25 crore. The eligibility criteria are less stringent than for mainboard listings, giving smaller companies easier access to capital markets.
A few examples of SME IPOs are Kaytex Fabrics IPO and Takyon Networks IPO, which successfully raised funds via SME platforms.
Mainboard IPO vs SME IPO: Key Differences
| Aspect | Mainboard IPO | SME IPO |
| Offer Documents | Reviewed and approved by SEBI. | Reviewed by stock exchange; SEBI review not mandatory. |
| Time to Go Public | Around 6 months or more. | Faster process, usually 3–4 months. |
| Underwriting | Not compulsory if 50% is subscribed by QIBs. | 100% underwriting required, with at least 15% by merchant bankers. |
| Eligibility Rules | Strict SEBI rules for listing. | Relaxed eligibility norms for SMEs. |
| Listing Exchange | Listed on main exchanges like NSE and BSE. | Listed on SME platforms like NSE Emerge and BSE SME. |
| Market Making | No requirement after IPO. | Mandatory market making to ensure liquidity. |
| Minimum Investment | Usually ₹10,000–₹15,000. | Higher entry, starting from ₹2,00,000. |
| Number of Investors Needed | At least 1,000 investors required. | Minimum 50 investors sufficient. |
| Capital Requirement | Must have post-issue capital of at least ₹10 crore. | Post-issue capital must not exceed ₹25 crore. |
| Reporting Frequency | Quarterly reporting of financial results. | Half-yearly reporting of financial results. |
Investor Perspective: Mainboard IPO vs SME IPO
From an investor’s viewpoint, Mainboard IPOs usually offer more stability due to stricter SEBI regulations, better governance, and established business models. They are suitable for risk-averse investors seeking steady returns.
On the other hand, SME IPOs offer high-growth potential but come with greater risk and higher entry costs. Investors in SME IPOs should be prepared for volatility and must carefully assess company fundamentals before investing.
Conclusion
Both Mainboard IPO and SME IPO play crucial roles in India’s capital markets. Mainboard IPOs provide large corporations with access to significant capital, while SME IPOs empower smaller companies to raise funds and expand their business.
The difference between Mainboard IPO and SME IPO lies in issue size, regulatory requirements, investor participation, and listing platforms. For companies, the choice depends on their size, growth stage, and capital needs. For investors, the decision should be based on risk appetite, investment goals, and market outlook.
Understanding Mainboard IPO vs SME IPO ensures that whether you are a business raising funds or an investor looking for opportunities, you can make informed, confident, and strategic decisions.
FAQs
What is the main difference between Mainboard IPO and SME IPO?
Mainboard IPOs are for large companies with a minimum ₹10 crore capital, while SME IPOs are for small firms with capital not exceeding ₹25 crore.
Which is safer to invest in: Mainboard IPO or SME IPO?
Mainboard IPOs usually involve established businesses, whereas SME IPOs are linked to smaller and growing companies. The level of risk can vary based on the company profile.
Where are Mainboard IPO and SME IPO listed?
Mainboard IPOs are listed on NSE and BSE, whereas SME IPOs are listed on SME platforms like NSE Emerge and BSE SME.
What is the minimum investment in Mainboard IPO vs SME IPO?
Mainboard IPOs usually require ₹10,000–₹15,000, while SME IPOs demand higher entry amounts, typically starting from ₹1,00,000.
Who should invest in SME IPOs?
SME IPOs are available to investors who meet the eligibility and investment criteria defined by the exchanges and regulatory authorities.
