In recent years, the Indian stock market has witnessed a significant surge in the number of Small and Medium Enterprises (SMEs) going public through Initial Public Offerings (IPOs). SMEs are playing a crucial role in India’s economic growth by contributing to job creation, innovation, and competitiveness. As we move into 2023, there is a growing interest among investors to explore opportunities in the SME IPO market. We will take a closer look at the SME IPO in 2023 that is already launched and expected to enter the Indian stock market and explore the potential opportunities and challenges for investors. We will also discuss the key factors that investors need to consider before investing in SME IPOs.
Top SME IPOs in India
Homesfy Realty Limited IPO (Homesfy Realty IPO)
Homesfy Realty Limited went public in January 2023 with a fixed price issue IPO, aggregating up to ₹15.86 Cr, and listing at NSE SME. The company’s financials show significant growth in total assets, revenue, profit after tax, and net worth. Homesfy Realty Limited offers residential property brokerage services to a variety of clients, including real estate developers, retail buyers and sellers, and investors.
It has a well-established network of 7 offices in 4 cities and a combination of both offline and online presence. The company’s strengths include experienced management, long-standing relationships with the largest developers in India, and a highly motivated workforce.
MCON Rasayan India limited IPO
MCON is a speciality chemicals company based in India that manufactures and distributes a wide range of products including speciality chemicals, pharmaceutical intermediates, and agrochemicals. The company has filed its draft red herring prospectus (DRHP) with SEBI for an initial public offering (IPO) of its subsidiary, MCON Rasayan Limited.
The MCON IPO listed for a price of ₹40 per share. It took place from March 6 to March 10, 2023. The total issue size aggregated up to ₹6.84 Cr, with all the shares in the issue being fresh. The lot size for the IPO was 3000 shares. The company was listed on the NSE SME exchange on March 20, 2023.
Systango Technologies Limited IPO
Systango Technologies Limited is a software solutions provider that offers customized digital platforms including Web2, Web3, and mobile applications with a focus on data and analytics. They offer their services in diverse fields, including property technology, hospitality financial services, and fantasy sports.
The company went public with an IPO in March 2023, and the lot size was 1600 shares. The IPO price range was ₹85 to ₹90 per share, and the total issue size was 3,868,800 shares. The company has experienced steady growth in its financials over the years, with a total revenue of ₹3,392.10 lakhs and a net profit of ₹676.99 lakhs in the fiscal year ending March 2022.
RBM infracon limited IPO
RBM Infracon Limited is an engineering and maintenance company that primarily works on mechanical and rotary equipment for various industries, including oil and gas refineries, cement, fertilizers, and power plants. Its services include fabrication and erection of structural work, piping, maintenance, insulation, and others.
The company has executed 14 turnaround shutdowns for clients such as Reliance Industries and Yara Fertilizers. It recently received a new order worth Rs. 200 crores from Malco Energy Ltd. RBM Infracon Limited went public through a fixed-price issue IPO with a lot size of 3000 shares in January 2023 and is listed on the NSE SME. Its financials show an increase in assets, revenue, and profit after tax in the past few years.
Srivasavi Adhesive Tapes Limited IPO
Srivasavi Adhesive Tapes Limited had an IPO in March 2023 in which it issued 3,780,000 shares with a fixed price of ₹41 per share and a lot size of 3000 shares. Srivasavi Adhesive Tapes Limited is an Indian company that manufactures and supplies industrial speciality self-adhesive tapes to various industries, including automotive, locomotives, aerospace, defence, and many others.
The company offers a wide range of adhesive tapes such as BOPP tapes, filament tapes, double-sided tapes, speciality foams/ films, and packaging tapes. It has two business divisions, namely domestic sales, and exports. The company has a presence in 23 states in India, and it exports products to countries such as Egypt, the USA, France, Kuwait, Poland, Qatar, Spain, Australia, Italy, South Africa, Indonesia, Sri Lanka, and the UAE.
Quality Foils (India) Limited IPO
Quality Foils (India) Limited is a manufacturer and exporter of cold rolled stainless steel strips/coils and stainless steel flexible hoses/pipes with over three decades of experience. The company’s products are sold domestically and internationally under the “Quality” brand name. The company possesses a production facility situated in Hisar, Haryana.
The company has recently launched an IPO with the issue open from March 14, 2023, to March 16, 2023, with a face value of ₹10 per share and a fixed price of ₹60 per share. The lot size of the IPO is 2000 shares, and the total issue size is 754,000 shares, aggregating up to ₹4.52 Cr. The company’s IPO was listed on March 24, 2023, on NSE SME. The funds raised through the IPO will be utilized to fund capital expenditure requirements towards the purchase of machinery, meet the working capital requirements of the Company, general corporate purposes, and meet the Issue Expenses.
Anlon Technology Solutions Limited IPO
Anlon Technology Solutions Limited had its IPO from Dec 29, 2022, to Jan 2, 2023, and was listed on NSE SME on Jan 10, 2023. The face value was Rs. 10 per share, and the issue price was between Rs. 95 to Rs. 100 per share. The lot size was 1200 shares, and the total issue size was 1,500,000 shares (aggregating up to Rs. 15.00 Cr).
Anlon Technology Solutions Limited is a company that provides engineering services, primarily for airports, high-rise buildings, and refineries. The company offers services such as airport rescue and fire fighting vehicles, high-rise building rescue, evacuation and fire fighting equipment, and disabled aircraft recovery kits.
The company was incorporated in 2015 and generated a total revenue of Rs. 1,958.60 lacs in FY22. In terms of competitive strengths, the company has an experienced management team, a strong technical team, a reputation for trustworthiness, and 24/7 customer service availability. The company provides services to clients across India, including cities such as Mumbai, Bangalore, Thane, Delhi, Hyderabad, Kurnool, Kannur, Jamnagar, Kolkata, Barmer, Ahmedabad, Lucknow, Guwahati, Mangalore, and Chennai.
Ducol Organics And Colours Limited IPO
Ducol Organics And Colours Limited went public with an IPO that closed on January 11, 2023, and started trading on the NSE SME on January 19, 2023. The lot size for the IPO is 1600 shares. Ducol Organics And Colours Limited is a corporation that produces and vends colourant concentrates, pigment dispersions, paste colourants, preparations, and masterbatches, catering to different sectors.
The company has established two manufacturing units in Taloja and is in the process of setting up a third in Mahad. Ducol’s products are used in the paints, ink, textiles, rubber, plastic, leather, paper, soap, detergent, and FMCG industries.
Lead Reclaim and Rubber Products Limited IPO
The Lead Reclaim and Rubber Products IPO opened on Feb 9, 2023, and closed on Feb 13, 2023. The lot size was 6,000 shares at a price of ₹25 per share, aggregating up to ₹4.88 Cr. The IPO was listed on NSE SME on Feb 21, 2023. Lead Reclaim and Rubber Products Limited, a manufacturer of reclaimed rubber, crumb rubber powder, and rubber granules was incorporated in 2012.
The company’s manufacturing facility is located in Sarali Road Village – Pithai, Taluka- Kathalal, Kheda. The company offers a variety of reclaimed rubber products, including whole tire reclaim rubber, butyl reclaimed rubber, and natural reclaimed rubber, which are available in different grades, widths, and thicknesses. These products are sold to automotive manufacturing sector OEMs, tier I companies, dealers, and distributors.
Factors to consider before investing in SME IPOs
- Understand the business model and financials of the SME.
- Assess the growth potential and ability to generate sustainable profits.
- Compare the valuation with peers to ensure the IPO price is reasonable.
- Be aware of the risks involved, such as limited liquidity and the potential for price volatility.
- Consider the track record and reputation of the management team and regulatory environment.
SME IPO trend in 2023
As of April 2023, a total of 25 SME IPOs have been launched, out of which 21 are listed on the stock exchanges. The average return of these 21 listed SME IPOs is 87.5%, which is significantly higher than the average return of mainboard IPOs. The key factors that have contributed to the success of these IPOs include strong financials, attractive valuations, and a favourable regulatory environment. While the SME IPO index has outperformed the main stock market indices, it is suggested that investors should conduct proper due diligence before investing in SME IPOs as investing in SME IPOs can be risky due to several factors, such as low liquidity, poor governance, and lack of analyst coverage.
Conclusion
In conclusion, SME IPOs in 2023 are expected to continue the trend of growth and development that has been witnessed in recent years. With favourable policies and initiatives by governments around the world, there is a renewed interest in SMEs and their potential for growth and innovation. As the global economy continues to recover from the effects of the pandemic, SMEs will play a crucial role in driving economic growth and job creation. The IPO market for SMEs is also expected to remain robust as investors seek new opportunities to diversify their portfolios and support the growth of these dynamic and agile businesses. The future looks bright for SMEs and their IPOs in 2023 and beyond.