SME IPOs: 2024 is setting new benchmarks in oversubscription, listing gains

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The SME IPO segment, launched more than a decade ago in 2012, has garnered unprecedented attention this year, with several public offerings drawing massive subscriptions and posting significant listing gains.Data from Prime Database shows that the list of top 20 SME IPOs in terms of oversubscription is heavily dominated by public issues that have come to the market in 2024.As many as 16 of the top 20 were launched in 2024, with two of the IPOs seeing subscriptions in excess of 1,000 times each – HOAC Foods India, which tops the list, was subscribed nearly 1,963 times when the issue was launched in May 2024.It was followed by Magenta Lifecare, which was launched in June 2024, and was subscribed nearly 1,003 times.If the top 10 SME IPOs in terms of subscriptions are taken into account, then eight of those were launched in 2024. It rises to nine if the IPO closing date of Kay Cee Energy & Infra Ltd is considered – it opened on December 28, 2023, and closed on January 2, 2024.Further, IPOs of SMEs like Green Hitech Ventures (771 times), Koura Fine Diamond Jewellery (727 times), Maxposure Ltd (697 times), Medicamen Organics (688 times), Slone Infosystems (642 times) and Brace Port Logistics (634 times) all came in CY24 and were subscribed more than 500 times each. If the top 10 SME IPOs in terms of oversubscription are taken into account, then eight of those were launched in 2024This assumes significance as the trend is being witnessed at a time when a section of market participants -- along with the regulator -- have expressed concerns related to the creation of artificial demand and unsustainable valuations in the SME segment.Also Read: Grey market premiums skyrocket for upcoming SME IPOs even as experts advise caution“The stability in the SME market depends on regulatory measures. Until the exchange imposes limits or caps on these IPOs and their subscriptions, investor enthusiasm will continue to drive high levels of oversubscription. The demand will persist, maintaining the current trend of excessive applications,” says Kresha Gupta, Director and Fund Manager, Chanakya Opportunities Fund, a Sebi-registered AIF that invests in SME IPOs.“The current trend of SME IPOs is not going to stop any time soon. The continuous rise in the market and active participation from domestic and foreign institutional investors are fuelling this trend. Retail investors, driven...

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