October sees sharp dip in SME IPO activity; Rs 219 crore raised from six issues

markets

After a strong surge in small and medium enterprise offerings earlier this year, the SME market has cooled noticeably in October. Only 6 IPOs, raising about Rs 219 crore, have launched so far this month — signalling a pause in fundraising momentum after a hectic September.

The lull follows a record-shattering run. Between January and September 2025, 211 companies tapped the SME primary market, mobilising nearly Rs 9,165 crore — the highest annual fundraising tally ever for the segment, achieved even before year-end.

Listing gains have softened too. In October, 35 SME companies listed; 11 opened below issue price, 11 delivered single-digit gains and 13 posted gains between 10–60 percent, with only 2 soaring above 80 percent. September saw 36 listings: 15 debuted in the red, 9 notched single-digit gains, and 12 returned 10–90 percent.

Year-to-date, 218 SME listings have hit the market: 77 opened negative, 63 posted single-digit returns, 38 delivered 10–30 percent, and 40 stocks gained 40–100 percent on debut.

Market experts say this moderation reflects timing and regulatory shifts, not weakening appetite. “It cannot be termed a slowdown,” said independent analyst GK Agarwal. “Lead managers rushed to launch IPOs in September due to regulatory timelines. Many filings from that period are pending approval and the next busy window is likely in December and March.”

A key driver of the September rush was the cut-off to file offerings using 31 March 2025 financials. From October, companies must submit 30 September numbers, necessitating fresh audits and temporarily slowing the pipeline. Meanwhile, tighter SEBI and exchange scrutiny over disclosures, pricing, banker due diligence and post-listing behaviour is prompting higher selectivity.

“The market is digesting a heavy issuance calendar,” said Narinder Wadhwa, MD & CEO, SKI Capital Services. “Investors have booked profits amid volatility in some SME counters, and merchant bankers are pacing deals more cautiously, prioritising fundamentally stronger issuers.”

In the near term, activity may stay moderate while audited half-year results flow in and volatility cools. However, underlying drivers remain strong: rising retail and HNI participation, increasing institutional interest in quality SME names, policy support for the MSME ecosystem and improving governance standards. The road ahead is expected to be steadier — fewer IPOs than the frenetic first half, but with higher-quality offerings likely to dominate, analysts said.

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