The initial public offering on small and medium exchanges has delivered better returns to investors compared with the lacklustre performance by many high-profile companies on the main board.
The number of companies tapping SME exchanges (BSE SME and NSE Emerge) increased 85 per cent last year to 109 from 59 logged in 2021. Following 135 in 2017 and 144 SME IPOs in 2018, this is the third-highest number.
The fund raised by companies from these exchanges more than doubled to ₹1,980 crore against ₹787 crore in 2021.
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In contrast, IPO on the main board was down 37 per cent at 40 last year against 63 in 2021. The fund raised by these companies almost halved to ₹59,939 crore ( ₹1,18,732 crore).
The average return on NSE Emerge was 71 per cent last year, while that of BSE SME was 42 per cent way ahead of major indices.
Many new-age companies on the main board have plunged after commanding a huge premium during the IPO. This had driven many disappointed retail and high net-worth investors to consider public offers of SMEs.
Top performers
The recent IPO of Pune-based DroneAcharya Aerial Innovations was subscribed 262 times and rewarded investors with listing gains of 88 per cent. The stock closed at ₹209 on Friday against the issue price of ₹54 in December.
Similarly, Kolkata-based Annapurna Swadisht — which manufactures snacks and food products — was subscribed 190 times and listed at an 80 per cent premium. Olatech Solutions, a software solutions company, saw the highest subscription of 598 times last year and gained 99 per cent on listing.
Cool Caps Industries, which manufactures plastic bottle caps and closures, was the top performer last year with its share price touching ₹500 on Friday against the issue price of ₹38 last March.
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Other top performers include digital technology firm Varanium Cloud (980 per cent), Rachana Infrastructure (637 per cent), Empyrean Cashews (570 per cent) and Jayant Infratech (540 per cent).
Uday Nair, Director, Fedex Securities, said the success of SME IPOs can be attributed to good companies tapping the market with attractive valuation and this has led to investor gaining confidence on SME platform over period of time.
After a successful run last year, the public issues on SME exchange look much better with more companies gearing to tap the market in this year, he added.
Prateek Jain, Director, Hem Securities, said of the 109 companies listed on the SME exchange, 30 were multi-baggers and 57 migrated to main board last year.
With one in five IPOs getting oversubscribed last year, the new companies listing on SME exchange is expected to increase three times this year and investors need to be cautious.