Are SME IPO good for company and investor?

For SME companies

SMEs may opt for IPO to raise funds and get listed on the stock exchange. If they raise funds through bank loans, they have to pay interest or repayments. SMEs do not have to pay interest when they go public to raise funds. The IPO process increases the visibility of the company's products and creates a brand image. The IPO roadshow makes the company known to people who are not yet aware of its operations.

The reasons why SMEs should go public are the following:

• They can raise money from the public without paying interest.
• Going public increases the net value of the company.
• Increase the visibility and promote the brand.
• An IPO provides an easy exit opportunity for existing shareholders.
• Helps raise money to expand business operations.
• Empowers the company to become prosperous.
• Provides easy access to the secondary market for equity financing after the IPO.
• To improve the company's brand awareness, corporate image and brand growth.

For investors

SME IPOs offer retail investors the opportunity to invest money in an SME company. These companies are in the early stages of growth and can offer high returns in the future.

If selected carefully, SME IPO can offer better returns compared to mainboard IPOs on the stock market or other investments.

Once listed on the stock exchange, SME shares are traded in the same way as any other listed shares. The only difference is that SME shares are traded in a minimum lot size of Rs 1 lakh. For example, if an SME share costs Rs 40, you have to buy at least 4000 shares. The share for this company is traded in a lot size of 4000 shares.

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