The recent 400-times oversubscription of Resourceful Automobile’s ₹12-crore SME IPO, a two-wheeler dealer with just two Yamaha showrooms and eight employees, highlights a growing trend in the Indian primary market where such oversubscriptions are becoming increasingly common.
According to data from Prime Database, 152 SME IPOs have been launched in 2024, with an average issue size of ₹33 crore and an average oversubscription of nearly 200 times. Notably, 18 of these IPOs were oversubscribed by more than 400 times. For example, Hoac Foods India‘s ₹5-crore IPO was oversubscribed 1,963 times in May, and Magenta Lifecare‘s ₹6.6-crore IPO saw over 1,000 times oversubscription.
In comparison, for every mainboard IPO, around three SME IPOs have been launched annually over the past three years. This year, 45 mainboard IPOs have been introduced, with an average issue size of ₹1,074 crore and an average oversubscription of 43 times.
In 2023, for instance, 182 SME IPOs were launched with an average oversubscription of 86 times, average listing gains of 36%, and average stock returns of 216%. In contrast, 57 mainboard IPOs saw an average oversubscription of 32 times, with listing gains of 29% and similar post-listing returns of 216%.
Moreover, the average listing gains for SME IPOs have been steadily increasing, rising from 2.2% in 2019 to an impressive 74% in 2024. The combination of attractive listing gains and strong post-listing performance with relatively low investment has kept investor interest in SME IPOs high, despite the small size and nature of the underlying businesses.