Uptick in SME firms migrating to mainboard

Uptick in SME firms migrating to mainboard

The last few years have seen an increase in the number of SME firms migrating to the mainboard of the stock exchanges. Fifty seven SME firms migrated to the mainboard in CY22. In the last three years, 176 firms witnessed that kind of migration. This accounts for 62% of the total 280 companies that have migrated to the mainboard since the SME platform began in 2012.

An SME firm can migrate to the mainboard after listing on the SME platform for at least two years. The company has to have a market capitalisation of Rs 25 crore or more, paid-up equity capital shall be more than Rs 10 crore and a clean track record as per SCORES.

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The BSE SME IPO and NSE Emerge indices have returned 42% and 71%, respectively, last year. This compares with 4.3% by the Nifty 50 and 3% by the Nifty 500.

One hundred seven (107) companies listed on the SME platforms in 2022, taking the total number of such listings to over 700 since 2012. Gujarat and Maharashtra led the list of states with maximum SME IPOs in 2022, accounting for 58% of total listings.

The total market capitalisation of listed SME companies amounts to Rs 1.19 trillion. The market cap of firms listed on the BSE SME platform is Rs 64,411 crore and that of companies on the NSE Emerge platform stands at Rs 55,476 crore.

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SME firms have mopped up over Rs 1,900 crore by way of 107 offerings last year, 142% higher than the previous year, and was more than cumulative Rs 1,529 crore garnered in the previous three years. CY18 was the best year for SME IPOs, with 141 offerings garnering Rs 2,287 crore.

Olatech Solutions (598.8x times), Arham Technologies (450x) and Baheti Recycling Industries (329x) got the maximum subscription last year. Phantom Digital Effects (229%), Agni Green Power (162.5%) and

Baheti Recycling Industries (153%) saw the maximum gains on the listing day.

The outperformance and the uptick in the number of SME IPOs are surprising given adverse market conditions last year for equities.

Despite the possibility of high returns, experts said there is a chance of losing one’s entire capital in SME stocks. Analysing these firms could be tough because analysts do not track them.