SME IPOs vs Mainboard IPOs – In India’s booming stock market, IPO investments have become a popular way for retail investors to participate in the growth of promising companies. However, not all IPOs are the same—SME IPOs and Mainboard IPOs operate under different rules, especially when it comes to lot size, pricing, and eligibility.
For many new investors, understanding the difference between SME (Small and Medium Enterprise) IPOs and Mainboard IPOs is crucial because:
- Lot size determines how much you need to invest.
- Risk and liquidity vary significantly between the two.
- Regulatory requirements differ for SMEs and large corporations.
What is Lot Size in IPO? (Why It Matters for Retail Investors)
Definition of Lot Size
The lot size in an IPO refers to the minimum number of shares an investor must apply for. It ensures fair distribution and prevents excessive bidding by large investors.
Why Lot Size Matters
- Determines Minimum Investment – If lot size is 50 shares and IPO price is ₹100, you need at least ₹5,000 to apply.
- Affects Retail Participation – Smaller lot sizes allow more retail investors to participate.
- IPO Allotment Chances – SEBI mandates that at least 35% of shares in retail category must go to small investors.
Example:
- Mainboard IPO (LIC, 2022) – Lot size: 15 shares (Price: ₹949 → ₹14,235 minimum investment).
- SME IPO (ABC India, 2023) – Lot size: 1,200 shares (Price: ₹50 → ₹60,000 minimum investment).
(Wait, why does SME IPO require a higher lot size? We’ll explain later.)
What are SME IPOs? (Features, Risks & Examples)
Definition of SME IPO
An SME IPO is a public offering by Small and Medium Enterprises (SMEs) listed on BSE SME or NSE Emerge platforms. These companies have:
- Market cap below ₹500 crore (usually).
- Simpler listing norms (less regulatory scrutiny).
- Higher risk but high growth potential.
Key Features of SME IPOs
✅ Smaller Companies – Startups, niche manufacturers, emerging businesses.
✅ Lower Compliance Burden – Easier to list than Mainboard IPOs.
✅ Higher Volatility – Less liquidity, wider bid-ask spreads.
✅ Mandatory Market Making – Ensures liquidity for 3 years post-listing.
Example of SME IPO:
- Srestha Finvest (2023) – Raised ₹30 crore, listed on BSE SME.
- DroneAcharya (2022) – Gained 270% post-listing on NSE Emerge.
(SME IPOs can deliver multibagger returns but come with higher risk.)
What are Mainboard IPOs? (How They Work)
Definition of Mainboard IPO
A Mainboard IPO is the traditional route for large companies to list on BSE or NSE. Examples include LIC, Zomato, Paytm.
Key Features of Mainboard IPOs
✅ Large, Established Companies – Market cap often ₹1,000+ crore.
✅ Strict SEBI Regulations – Detailed disclosures, profitability norms.
✅ Higher Liquidity – More institutional investor participation.
✅ Lower Volatility – Stable price movements compared to SME IPOs.
Example of Mainboard IPO:
- Zomato (2021) – Raised ₹9,375 crore, listed on NSE.
- Nykaa (2021) – Delivered 80% listing gains.
(Mainboard IPOs are safer but may offer slower growth than SME IPOs.)
SME IPOs vs Mainboard IPOs
| Feature | SME IPO | Mainboard IPO |
| Listing Platform | BSE SME / NSE Emerge | BSE / NSE Mainboard |
| Market Cap | Usually < ₹500 crore | Often ₹1,000+ crore |
| Regulatory Norms | Lighter compliance | Strict SEBI rules |
| Lot Size | Higher (e.g., 1,000+ shares) | Lower (e.g., 10-15 shares) |
| Liquidity | Lower (riskier) | Higher (safer) |
| Investor Type | Mostly retail/HNIs | Retail + Institutions |
Lot Size Comparison: SME vs Mainboard IPOs
Why SME IPOs Have Larger Lot Sizes
- Targets HNIs & Experienced Investors – SMEs want serious investors who can hold long-term.
- Lower Liquidity Risk – Prevents excessive retail speculation.
- Higher Minimum Investment – Filters out small retail traders.
Example:
| IPO Type | Company | Lot Size | Price per Share | Min. Investment |
| SME IPO | XYZ Ltd | 1,200 | ₹50 | ₹60,000 |
| Mainboard | LIC | 15 | ₹949 | ₹14,235 |
(Mainboard IPOs are more accessible to small investors.)
Pros & Cons of SME vs Mainboard IPOs
SME IPO Advantages
✔ High Growth Potential – Can deliver 100%+ returns.
✔ Early-Stage Opportunity – Invest in emerging sectors.
SME IPO Risks
✖ Low Liquidity – Harder to exit.
✖ Higher Volatility – Prices swing wildly.
Mainboard IPO Advantages
✔ Stable & Liquid – Easier to buy/sell.
✔ Institutional Backing – More analyst coverage.
Mainboard IPO Risks
✖ Slower Growth – Large companies grow steadily.
Final Verdict: Which Should You Choose?
- For Safety & Liquidity → Mainboard IPOs (LIC, Zomato).
- For High-Risk High-Reward → SME IPOs (DroneAcharya, Srestha Finvest).
FAQs (People Also Ask)
Q1. Can retail investors apply for SME IPOs?
✅ Yes, but lot sizes are larger (often ₹50,000+).
Q2. Why are SME IPO lot sizes bigger?
📌 To attract serious investors and reduce speculative trading.
Q3. Which is better for beginners?
🛡️ Mainboard IPOs (safer, lower lot sizes).
Q4. Do SME IPOs give higher returns?
🚀 Yes, but with higher risk (some gained 300%+, others crashed).
