SME IPO in 2022

Small and medium-sized enterprises (SMEs) started gearing up for growth opportunities, as the global economy started to recover from the pandemic-induced downturn. Going public through an initial public offering (IPO) is a popular way for SMEs to raise capital and expand their businesses. With the Indian stock market which started gaining momentum after the pandemic, 2022 was expected to be a promising year for SME IPOs in India. We will discuss the SME IPO in 2022 and explore the factors that influenced the success of SMEs going public in 2022.

Top 10 SME IPO in 2022

Cool Caps Industries Limited IPO

Cool Caps Industries Ltd. (CCIL) is a manufacturer and marketer of plastic bottle caps, with facilities in West Bengal and Uttarakhand. It also produces face masks, trades in shrink film, and is involved in the trading of plastic granules. The company went public in March 2022 with an IPO of 3,060,000 shares, aggregating up to ₹11.63 Cr, and is listed on the NSE SME. The IPO aimed to utilize the net proceeds for working capital requirements and general corporate purposes. The company operates in a highly competitive and fragmented segment, and the issue is considered fully priced based on its current financial data.

Empyrean Cashews Limited IPO

Empyrean Cashews Limited is a cashew processing company that sells flavored cashews under the brand name Krishival Cashews. The company has a network of more than thirty distributors across India and offers different grades and packaging formats. Its products are available on Flipkart, Messho, and India Mart. Empyrean Cashews has processing and packaging units in Maharashtra and a subsidiary named Siddhivinayak Cashew Industries Private Limited. The company went public in March 2022 through an IPO on NSE SME and raised Rs 19.41 crore to meet working capital requirements, general corporate purposes, and issue expenses.

Varanium Cloud Limited IPO

Varanium Cloud Limited is a technology company that provides digital audio and video content streaming services, online payment facilitation services, low-bandwidth digital education content platforms, and information technology-related services. The company had planned to set up three containerized edge data centers and roll out three flagship digital learning centers with the proceeds from its IPO. The IPO was a fixed price issue with a face value of ₹10 per share and a price of ₹122 per share.

The lot size for the IPO was 1,000 shares, and the total issue size was 3,000,000 shares, aggregating up to ₹36.60 crores. The IPO opened on September 16, 2022, and closed on September 20, 2022, and it was listed on September 27, 2022, on the NSE SME. Varanium Cloud reported a loss in FY20 but had marked spectacular top and bottom lines for FY22. The sustainability of such margins is a major concern, making the IPO suitable for well-informed or risk-seeking investors for the medium to long term.

Jay Jalaram Technologies Limited IPO

Jay Jalaram Technologies Limited was established in the year 2012 and is involved in the retail sale of smartphones, related accessories, and various durable consumer electronics products such as Smart TVs, Air Conditioners, Refrigerators, Coolers, and so on, under multiple brands. The company operates under the brand name “KORE”. As of April 30, 2022, the company had a total of 82 stores across the state of Gujarat, out of which 10 are company-owned retail outlets, 65 are franchisee-owned, and 7 are franchisee-owned and company-operated.

Jay Jalaram Technologies Limited holds the exclusive rights to sell Electric Bikes, their components, and accessories under the brand name “Revolt” in the Ahmedabad region. The company’s IPO opened on August 26, 2022, and closed on August 30, 2022. The issue price was INR 36 per share with a lot size of 3000 shares, aggregating up to INR 10.80 crores. The company’s IPO was listed on the NSE SME on September 8, 2022.

Concord Control Systems Limited IPO

Concord Control Systems Limited is an Indian railway product manufacturing company that was established in 2011. The company produces and supplies coach-related and electrification products for Indian Railways, and its primary products include Emergency Lighting Systems, Inter-Vehicular Coupler, Brushless DC carriage fans, Bellows, and Tensile Testing Machines. Research Design and Standards Organisation (RDSO) has approved Concord Control Systems for the manufacturing and supply of these products to the Indian Railways.

It has two manufacturing units located in Lucknow, Uttar Pradesh. As of March 31, 2022, the company’s revenue from operations was Rs. 3,144.69 lakhs. The company launched its initial public offering (IPO) in September 2022 and raised Rs. 8.32 crore through the sale of 1,512,000 shares listed on the BSE SME platform on October 10, 2022. The price range of the IPO was Rs. 53 to Rs. 55 per share and a lot size of 2,000 shares. The proceeds from the IPO will be used to meet working capital requirements, general corporate purposes, and issue expenses.

PNGS Gargi Fashion Jewellery Limited IPO

PNGS Gargi Fashion Jewellery Limited is a retail company established in 2009 that deals in costume and fashion jewelry, idols and other silverware, and related gift items. The company provides an extensive collection of items such as earrings, pendants, necklaces, chains, and rings for fingers, bracelets, anklets, nose pins, mangal sutra, pendant sets, and bangles, made of brass or silver. for females of all age groups and male accessories such as rings, cufflinks, and button sets.

The company also has an agreement with P.N. Gadgil & Sons Limited and P. N. Gadgil Art & Culture Foundation that includes providing security guards to all the stores. PNGS Gargi Fashion Jewellery Limited’s recent IPO closed on December 13, 2022, aggregating up to ₹7.80 Cr, and it is listed on the BSE SME exchange.

Upsurge Seeds of Agriculture Limited IPO

Upsurge Seeds of Agriculture Limited (USA) is a seeds manufacturing company based in India that produces seeds for a range of field crops and vegetables. Until March 31, 2022, the company had manufactured seeds for over 40 distinct field crops and vegetables and was operational throughout India, specifically in Gujarat, Maharashtra, and Rajasthan. The company’s product portfolio includes crop seeds for Groundnut, Wheat, Cumin, Green Gram, Black Gram, and vegetable seeds for Onion, Coriander Seeds, Fenugreek, etc.

In July-August 2022, Upsurge Seeds of Agriculture Limited launched its IPO, with a face value of Rs 10 per share and a fixed price of Rs 120 per share. The lot size for the IPO was 1200 shares, and the total issue size was 1,900,800 shares aggregating up to Rs 22.81 crores. The IPO opened on July 29, 2022, and closed on August 2, 2022. The company’s shares were listed on NSE SME on August 11, 2022.

Containe Technologies Limited IPO

Containe Technologies Limited is a company that deals with automobile safety and GPS solutions for the automobile industry. They produce various high-tech automotive products, such as electronic speed limiters and communication devices based on GSM/GPRS/GPS/IRNSS technology that track vehicle locations. The company has a manufacturing unit located in Marriguda, Secunderabad, Hyderabad, and its products are mainly sold through distributors and dealers.

CTPL’s IPO was launched from Sep 20, 2022, to Sep 22, 2022, and was listed on BSE SME on Sep 30, 2022. The face value of the shares was ₹10 per share, and the issue price was ₹15 per share, with a lot size of 8000 shares. The total issue size was 1,744,000 shares aggregating up to ₹2.62 Cr, and the IPO was a fixed price issue.

Krishna Defence and Allied Industries Limited IPO

Krishna Defence and Allied Industries Limited, established in 1996, is engaged in the development, manufacturing, and designing of Defense Applications, Kitchen and Dairy Equipment Products, and Homeland and security products for the Indian Armed Forces, Forest Department, and Police Department. The company offers a diversified range of products, including ballast bricks, improvised explosive device containment vessels, automatic tire killers, modular vehicle barriers, and more. The company started a new vertical in 2020 to manufacture and market Homeland and security products. In 2022, the company went public with an IPO aggregating up to ₹11.89 crores, issuing 3,048,000 shares at a price range of ₹37 to ₹39 per share.

Globesecure Technologies Limited IPO

Globesecure Technologies is a company based in India that specializes in digital transformation and offers services such as cyber security, integrated enterprise solutions, and managed services. The company has completed various projects related to cybersecurity transformation, digital transformation, and infrastructure for both individuals and institutions. The company’s strengths include experienced management, a dedicated tech support team, complex migration project handling, and a dynamic revenue model with continued relations with clientele. The IPO opened on May 23, 2022, and closed on May 25, 2022, with a fixed price of ₹29 per share. The lot size was 4000 shares, and the total issue size was 3,492,000.

IPO trend in 2022

The Indian IPO market in 2022 was impacted by economic turbulence, volatility, rising interest rates, and tensions in Europe, making investors wary of taking risks. While larger companies like MobiKwik and boAt delayed going public, smaller IPOs and SMEs debuted. The year saw 146 companies going public, with smaller issue sizes and high subscription rates. Most companies traded above their issue price, and investors preferred IPOs of companies with strong fundamentals. While most companies that went public in 2022 underperformed the benchmark index, the SME segment turned out to be multi-baggers.

Factors that Influenced the Success of SME IPOs in 2022

• The overall state of the economy.
• The regulatory environment, including SEBI’s measures to streamline the listing process and reduce compliance requirements for SMEs.
• Investor sentiment towards SMEs and the stock market in general.
• The performance of previous SME IPOs and their impact on investor confidence.
• The quality and strength of the SME’s business model and financials.
• The company’s sector and industry, including growth prospects and competition.
• The strength of the SME management team and their ability to navigate the challenges of going public.
• The pricing of the IPO, including the issue price and the pricing on the listing day.
• The marketing and promotion efforts of the SME and its underwriters to attract investor interest.

Conclusion

Thus, the year 2022 saw a surge in SME IPOs, with many small and medium enterprises taking advantage of favorable market conditions to raise capital and expand their businesses. Investors also showed strong interest in these offerings, indicating a growing appetite for SME investments. While the future remains uncertain, the success of SME IPOs in 2022 may encourage more companies to consider going public in the future.