Credit and finance for MSMEs: The number of SME IPOs hitting stock exchanges (BSE SME and NSE Emerge combined) jumped 84 per cent from 59 IPOs raising Rs 787 crore in the calendar year 2021 to 109 raising Rs 1,980 crore in 2022 — third highest after 144 SME IPOs in 2018 and 135 in 2017, showed data from market tracker Chittorgarh.com. The SME IPOs have been on an upswing since 2020 when the count plunged to 27, the lowest since 2012 when the two SME exchanges BSE SME and NSE Emerge were launched.
The top performer in SME IPOs in 2022 was Kolkata-based Cool Caps Industries, which manufactures plastic bottle caps and closures, with 981 per cent gains since its listing in March 2022. Other top performers delivering maximum gains were digital technology firm Varanium Cloud (980 per cent), infrastructure and construction company Rachana Infrastructure (637 per cent), cashew maker Empyrean Cashews (570 per cent), railway infrastructure development company Jayant Infratech (540 per cent) and more.
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Ajay Thakur who heads BSE SME and Startup exchange at BSE said there is already a huge jump in the number of SME filings in the current fiscal from the previous year, with investors lured by handsome returns and coming to pick SME offerings. “In FY23 so far, we have received around 75 filings from 38 in FY22. Investors are now attracted to SME stocks with attractive valuations and returns delivered by small businesses in the previous year. Hence, with interest coming on the SME platform, we will see further increase in filings and merchant bankers who are coming for SME stocks,” Thakur told FE Aspire.
According to Pranav Haldea, Managing Director at capital market data firm PRIME Database, the momentum seen in the last two months of 2022 is likely to continue, at least for the smaller-sized IPOs. “However, it may be a while before we see larger-sized deals, given the absence of sustained interest by foreign portfolio investors,” Haldea said.
In comparison to SME IPOs, the number of mainboard issuances was significantly low in 2022 with only 40 IPOs hitting the market and raising Rs 59,939 crore. 2022 mainboard IPOs were also down from 63 IPOs raising Rs 119,882 crore in 2021 while the gains were also relatively muted. According to Chittorgarh.com, the top 10 mainboard performing IPOs (BSE and NSE) were Adani Wilmar with 148 per cent gains followed by Hariom Pipe Industries (128 per cent), Venus Pipes & Tubes (121 per cent), Veranda Learning Solutions (93 per cent), Ruchi Soya Industries (82 per cent), and more.
Also read: Listed SMEs have better profitability ratios, higher return on assets but lower liquidity: RBI paper
“Valuation (of SME stocks) has performed a crucial role for investors to get attracted. When the BSE SME exchange was started, the average issue size used to be Rs 4-5 crore and now it is coming in the range of Rs 15-20 crore,” added Thakur.
Importantly, the overall IPO pipeline in 2023 seems strong with 54 companies proposing to raise Rs 84,000 crore with the Securities and Exchange Board of India’s (SEBI) approval, according to Prime Database. “Another 33 looking to raise close to Rs 57,000 crore are awaiting approval. Of these 87 firms, eight are new-age tech firms, looking to raise roughly Rs 29,000 crore.”
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