Small and medium enterprise listings in India have seen a significant downturn this year, with many trading below their issue prices, contrasting the steady growth of mainboard issues and highlighting changing investor preferences in a volatile market.
SME IPOs have had a bruising year in India, even as the broader listing market has held up better. Business Standard reported that 151 small and medium enterprise offerings raised ₹2,078.55 crore in 2026, but 70 are trading below their issue price and 21 have fallen by at least half. The median SME listing is up just 1 per cent, far short of the 27.1 per cent median gain for mainboard issues, leaving many investors with very little to show for the rush into smaller stocks.
The gap has also shown up in index performance. Exchange data cited by Business Standard shows the Nifty Emerge Index, which tracks SME shares, has fallen 2.3 per cent over the past year, while the Nifty IPO Index has gained 10.41 per cent. That contrast reflects a clear shift in sentiment: investors appear to be favouring larger, more established companies, particularly in a volatile market where confidence in smaller names has weakened.
Prime Database data suggests the weakness has been broad-based rather than confined to one part of the year. In the July-to-September period, SME listings delivered a median return of just 0.1 per cent as of September 29, with 45 per cent trading below their offer price. The first six months of the year were little better, with 47 per cent of the 76 SME issues listed between January and June trading under their issue price and a median return of 5.1 per cent. That is a sharp reversal from 2023, when SME offerings enjoyed a powerful rally and drew strong retail interest after a run of sturdy listing gains.
Market participants say the change is linked to a more difficult backdrop and higher caution among investors. Abhay Agarwal, founder and fund manager at Piper Serica, told Business Standard that smaller firms trying to price their offerings attractively can be hit harder in weak markets, especially when merchant bankers are focused on completing subscription rather than securing durable demand. He also said the cost of an SME IPO has risen, from about 7 per cent roughly a year ago to a range of 10 per cent to 12 per cent now. That, combined with uncertainty in the economy, has made the segment harder to sell.
Yet the pipeline has not dried up. Business Standard reported that September alone saw 52 SME offers worth ₹2,078.55 crore, making it the second-busiest month since January 2020 after September 2025. Agarwal said the month was unusual because of a September 30 deadline that prompted issuers to rush in, although he added that October may be quieter as the market digests the recent burst of activity. The broader index composition also shows how concentrated sentiment remains: NSE data cited in the report shows the Emerge Index has 539 stocks, with V Marc and Oriana Power among its largest holdings, while the Nifty IPO Index, made up of 100 stocks, is led by Lenskart and Groww.
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