The SME IPOs have been attracting a lot of investor interest, but the scenario is significantly challenging in the secondary markets, with the BSE SME IPO Index seeing deep correction. Many market players are worried that this is the beginning of a long-term cautious phase as the Index has fallen 16.6% in a month from its peak of 114,992. When an index declines over 10% from its recent peak in a short time then it is said to have entered correction mode.
The BSE SME IPO index is a basket of 30 stocks, which touched its all-time high level on August 28, 2024. The index declined almost 17% from the peak to a level of 98,550.74 on October 07.
Tarun Singh, founder and MD of Highbrow Securities, said that valuation is a big concern as large companies are valued at a big discount compared to SMEs. “The recent correction is largely attributed to concerns over quality and regulatory issues.”
The BSE SME IPO index is a reflection of the market. All the indices have fallen, both smallcap and midcap. The SME IPO index has followed the overall market trend; it’s just that the SME IPO index has fallen a bit more compared to other indices, said Ajay Thakur, CEO & Managing Partner at TGI SME Capital Advisors, while taking a different approach. Thakur was formerly the Head of the BSE SME & Startup platform.
Nifty Vs BSE SME IPO Index
The SME IPO index started its uptrend in the last two years and didn’t see much traction before that. However, the BSE SME IPO index has yielded a return of 71% in the last six months and 115% from the year to date. The index has given multi-bagger returns in the last five years, rising as much as 5,899%.
Apart from that, the benchmark indices have also seen a fall of around 5% after the conflict in West Asia between Israel, Iran, and Hamas intensified.
The Nifty 50 fell 5.42% from its recent hike, and the Sensex closed on October 07 with a loss of 5.5%.
Upcoming SME IPOs
Despite the challenging market environment, several companies are preparing to launch their IPOs. Notable upcoming offerings include:
- H.M. Electro Mech: Expected to raise ₹27.74 crore, with shares priced between ₹71 to ₹75.
- GB Logistics: Aiming for ₹25.07 crore at a price range of ₹95 to ₹102.
- CLN Energy: Targeting ₹72.30 crore, priced between ₹235 to ₹250.
These IPOs are set against a backdrop of increased scrutiny from investors who are now more cautious due to recent market trends.