SME IPO vs mainboard IPO in India explained

Sep 29, 2026•Aaditya Aanand

A thick bound offer document with a cloth ribbon marker standing beside a much thinner booklet on a wooden desk, with a fountain pen, reading glasses and a cup of chai.

Quick Answer: An SME IPO lists on NSE Emerge or BSE SME under Chapter IX of SEBI's ICDR Regulations, while a mainboard IPO follows Chapter II. The SME route requires a two-lot application above ₹2 lakh, compulsory market making for three years and a draft document filed with the exchange rather than SEBI.

Companies raising equity from the public for the first time in India have two separate tracks. Small and medium enterprises use dedicated exchange platforms with their own rulebook. Larger issuers use the main board of NSE and BSE.

SEBI reworked much of the SME rulebook through an amendment notified on 3 March 2025. This guide compares the two routes rule by rule. It uses the ICDR text as last amended on 21 March 2026.

What is the difference between an SME IPO and a mainboard IPO?

Issuer size is the main difference: the SME route is open only to companies with post-issue paid-up capital of up to ₹25 crore. Regulation 229 of the SEBI ICDR Regulations, 2018 sets the Chapter IX ceiling at ₹10 crore and lets issuers between ₹10 crore and ₹25 crore use it as well.

The two chapters also regulate the offer differently. An SME issue must be underwritten for 100% of the offer, with the lead manager taking at least 15% on its own account and also arranging compulsory market making on the SME exchange for at least three years from listing. Chapter II requires no market making.

Draft offer documents also go to different bodies: SEBI for a mainboard issue, the exchange for an SME issue. Under Regulations 35 and 256, both routes accept bids only through ASBA, the blocked-amount payment system.

SME IPO vs mainboard IPO in India in 2026: lot size and eligibility

On the main board, the minimum application is ₹10,000 to ₹15,000, against two lots worth more than ₹2 lakh in an SME issue. The table sets out the other rule-level differences, from issuer size and the profit test to market making, as they stand in 2026.

SME IPO vs mainboard IPO rules (SEBI ICDR Regulations 2018, last amended 21 March 2026; as of 22 September 2026)

Rule	Mainboard IPO (Chapter II)	SME IPO (Chapter IX)
Where the shares list	Main board of NSE or BSE	NSE Emerge or BSE SME platform
Issuer size	No paid-up capital ceiling	Post-issue paid-up capital up to ₹25 crore (Reg 229)
Profit test	Average operating profit of ₹15 crore over three years, profit in each year, or 75% of net offer to QIBs (Reg 6)	EBITDA of ₹1 crore in two of the last three years (Reg 229(6)) plus exchange criteria
Minimum application	₹10,000 to ₹15,000 (Reg 47)	Two lots, above ₹2 lakh (Reg 267)
Anchor investor minimum	₹10 crore (Reg 2)	₹2 crore (Reg 2)
Minimum allottees	1,000 (Reg 49)	200 (Reg 268)
Draft offer document	Filed with SEBI (Reg 25)	Filed with the SME exchange, no SEBI observations (Reg 246)
Market making	Not required	Compulsory for at least three years (Reg 261)

Both chapters split the net offer alike: at least 35% for individuals, at least 15% for non-institutional investors and at most 50% for qualified institutional buyers. On an SME issue, the 35% goes to individuals applying for the minimum two-lot size.

The same differences mean subscription figures do not travel between the two. Reading an SME multiple against a mainboard multiple is a category error rather than a small imprecision, because the two are produced by different rules on different investor bases.

What does SME IPO mean?

SME IPO stands for small and medium enterprise initial public offering, a first share sale by a company with up to ₹25 crore of post-issue paid-up capital. SEBI's regulations call the listing venue an "SME exchange". In India there are two. NSE runs NSE Emerge, and BSE runs BSE SME, which BSE says it launched on 13 March 2012.

Larger companies take the mainboard IPO route. SEBI reviews the draft, and the shares list on the main board. Our notes on the Maharaja & Speedex BSE SME issue and Infrax Renewable's two-lot minimum application show how SME issues disclose price bands and lots.

What are the SME IPO eligibility criteria?

Since the 2025 amendment, an SME issuer needs EBITDA of at least ₹1 crore from operations in at least two of the three previous financial years. That condition sits in Regulation 229(6), next to the ₹25 crore size ceiling.

Other ICDR conditions apply at filing. A former proprietorship, partnership or LLP must have existed as a company for one full financial year. If promoters change completely, or new promoters acquire more than 50%, the issuer must wait one year before filing.

Caps on the offer itself came with the 2025 ICDR amendment. An offer for sale may not exceed 20% of the issue, and each selling shareholder may offer no more than 50% of its pre-issue stake. General corporate purposes can take at most 15% of the amount raised or ₹10 crore, whichever is less, and proceeds may not repay loans from promoters or related parties.

On top of that, the exchange adds its own tests. NSE Emerge's eligibility criteria ask for a three-year track record, positive net worth and positive free cash flow to equity in two of the three years before applying.

How long does an SME IPO take to list?

An SME IPO lists on T+3. That is the third working day after the issue closes, and the same timeline applies to mainboard issues under a SEBI circular dated 9 August 2023.

That circular made T+3 mandatory for public issues opening on or after 1 December 2023. It sets no separate SME timetable. Its annexure schedules the basis of allotment for T+1, credit of shares and unblocking of unsuccessful bids for T+2, and the start of trading for T+3.

Before listing, the issue itself stays open for three to ten working days under both chapters, and an SME issue can open only three working days after the offer document is filed with the Registrar of Companies.

Once a company lists, Multibagg Alerts can send updates on stocks in a portfolio or watchlist. These include corporate actions and quarterly results.

Where is the SME IPO DRHP filed?

Under Regulation 246, an SME IPO's draft red herring prospectus is filed with the SME exchange where the shares will list, not with SEBI. The lead manager submits it along with a due diligence certificate and site visit report.

Since March 2025, the draft must stay open for public comments for at least 21 days on the websites of the issuer, the exchange and the lead manager. Within two working days of filing, the issuer must also announce it in an English, a Hindi and a regional daily newspaper.

SEBI receives the final offer document once it is filed with the Registrar of Companies but, under the same regulation, will not issue observations on it. A mainboard issuer, by contrast, files three copies of its draft with SEBI under Regulation 25.

What is the SME IPO index?

India has two SME IPO benchmarks: NIFTY SME EMERGE, with a base value of 1000, for NSE Emerge, and the BSE SME IPO index for BSE's platform. Neither covers mainboard stocks.

NSE Indices' methodology gives NIFTY SME EMERGE a base date of 1 December 2016. The index weights stocks by free-float market capitalisation, reconstitutes quarterly and drops a stock that moves to the NSE mainboard. Our note on BSE's SME to main board migration criteria covers the exchange-side tests behind such a move.

BSE's factsheet for the BSE SME IPO index uses a base of 100. A company joins on the second day after listing and leaves once three years of listing are complete, so the index tracks recent SME listings rather than the whole platform.

Follow SME and mainboard issues on Multibagg

Both routes list on T+3 and publish price bands and lot sizes through the exchanges, and Multibagg's IPO dashboard gathers upcoming, open and recently listed issues from NSE and BSE in one list, with the lot size shown for each.

Disclaimer: This article is for educational and informational purposes only. Multibagg AI is not a SEBI-registered investment adviser or research analyst, and it does not provide investment, financial, legal or tax advice. Nothing here is a recommendation to buy, sell, hold or invest in any security. Market data is shown as of the dates stated and may have changed since. Please consult a SEBI-registered adviser before making any investment decision.

Aaditya AanandFounder and CEO

Aaditya Aanand is the founder and CEO of Multibagg AI. An IIT Kanpur alumnus, he has worked across technology and financial markets at Goldman Sachs and American Express. His writing explores investing, markets and AI.

Frequently Asked Questions

Promoter shares in an SME IPO stay locked in longer than on the main board. Regulation 238 locks the minimum 20% promoter contribution for at least three years and, since March 2025, excess holdings half for two years and half for one. Mainboard lock-ins are 18 months and six months, longer where proceeds mainly fund capital expenditure.

Yes. Under Regulation 277, an SME-listed company whose post-issue paid-up capital is above ₹10 crore and up to ₹25 crore may move to the main board. Shareholders must pass a special resolution by postal ballot, with non-promoter votes in favour at least twice those against, and the company must meet main board listing criteria.

Anchor investors face the same lock-in in SME and mainboard IPOs: half their shares for 30 days and half for 90 days from allotment. SEBI's Schedule XIII book building rules apply on both routes. If the final issue price is above the anchor price, anchors pay the difference, and if it is lower, nothing is refunded.

Minimum subscription differs because a mainboard IPO needs 90% of the offer while an SME IPO must be fully underwritten. Regulation 45 sets the 90% floor, except for an offer for sale, and requires refunds within four days of closing if it is missed. Regulation 260 requires SME underwriting for 100% of the offer, not only the minimum subscription level.

SEBI's ICDR amendment notified on 3 March 2025 raised the minimum SME allottees from 50 to 200, added the ₹1 crore EBITDA test and capped offers for sale at 20 per cent of the issue. It also split the non-institutional portion under Regulation 253(2): one-third for bids above two lots and up to ₹10 lakh, and two-thirds for bids above ₹10 lakh.

Yes, under a 2025 proviso to Regulation 280. If a rights, preferential or bonus issue would lift post-issue paid-up capital beyond ₹25 crore, the company may stay on the SME exchange. It must then undertake to comply with the SEBI listing regulations that apply to main board companies, even though its shares keep trading on the SME platform.

No allotment can be made. Regulation 268(1) prohibits an issuer from making an allotment pursuant to a public issue where the number of allottees in an initial public offer is fewer than two hundred, so the issue does not complete and application money is returned.

SME IPO proceeds cannot be used to repay loans taken from promoters, the promoter group or any related party. Regulation 230 bars this directly or indirectly. It also caps general corporate purposes at 15% of the amount raised or ₹10 crore, whichever is less, and those purposes plus unidentified acquisition targets at 35%.