look news india
The number of IPOs of small and medium enterprises is constantly increasing, but its returns have been declining recently. The SME IPO index has been trading with a decline for the last one month. It has declined by 8% in the last two weeks. In comparison, the BSE mid-cap and small-cap indices have remained stable. There has been no increase in it in the last two weeks.
There is news that the Securities and Exchange Board of India (SEBI) may tighten listing and other rules for SME IPOs. Due to this, investors are in a cautious mood. Importantly, SEBI had said last month that investors need to be cautious about the methods used by some SME IPOs to attract investors. The regulator also said that the current developments highlight the lack of monitoring by auditors, merchant bankers and exchanges.
This kind of enthusiasm is nothing new for investors. In the 1990s, many companies raised money on the main board and later disappeared without any evidence. Perhaps this has slipped investors' minds. Regulators would probably like to prevent such developments in this sector of the market. However, SME IPOs are the responsibility of the exchanges. The number of IPOs and investor funds is growing every day.
According to Prime Database, in calendar year 2024, 194 SME IPOs raised Rs. 6,500 crore, while in calendar year 2021, 59 companies from this segment raised Rs. 746 crore was collected. However, it remains to be seen whether the decline in returns in this segment is a result of low investor participation and whether this trend will continue going forward.