Mumbai: Index operator NSE has capped the listing price of SME IPOs at 90 per cent of the issue price in a move that follows outsized listing price gains seen by public issues of small- and medium-sized enterprises (SMEs). Investors must note that this rule only applies to SME IPOs and mainboard IPOs will be untouched from this rule.
The move is aimed at standardising the opening price discovery/ equilibrium price, the NSE said. This cap will apply across exchanges during the pre-opening session for SME IPOs, it said. The circular will be effective immediately, i.e., July 4, 2024, the NSE said.
How NSE ‘s listing price cap on SME IPOs affects you
The move is aimed at investor protection and curbing the euphoria in markets surrounding SME IPOs, said stock market advisor Aditya Shah in a post on X. Investor interest is often piqued by these IPOs since they command a sizeable grey market premium before the subscription actually opens, indicating a higher listing price and gains for investors who were allotted the shares. These investors are likely to offload the stock on listing day for higher gains.
SME IPOs are characterised by their small size and scale. These IPOs also typically offer more shares for minimum investment, indcating a alrger lot size, which means investors have to park more funds in SME IPOS comapred to a mainboard IPO. The ticket size of SME IPOs is likely to remain below Rs 100 crore. However, this may niot always be the case. These IPOs are typically listed on the BSE/ NSE SME indices.
SME IPOs that listed at record highs
Goyal Salt’s IPO listed at a 258.2 per cent premium in October 2023.
Sungarner Energies listed at a 216.1 per cent premium last year.
VFX comoany Basilic Fly Studio secured a 193.35 per cent premium on listing day.
Orian Power’s stock is listed at a 168.7 per cent premium.
Anlon Technology Solutions’ stock is listed at a 162.7 per cent premium over the IPO price.
Upcoming SME IPOs this week
A total of 120 SME IPOs were introduced so far in 2024, according to data by Chittorgarh. Two SME IPOs, namely, Ganesh Green Bharat and Effwa Infra & Research will open for subscription on Friday, July 5, 2024. Ambey Laboratories’ SME IPO opened for subscription on Thursday, July 4, 2024.
The NSE in a notification announced that SME IPOs’ listing price will be capped at 90 per cent of the issue price, in a move to protect retail investors and curb the exuberance around public issues in this category. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
