The Securities and Exchange Board of India proposed Small and Medium Enterprises-only (SME) IPOs for companies valued up to Rs. 1,000 crore, as per a consultation paper.
The companies valued between Rs. 1,000-4,000 crore may choose to list on either the SME or mainboard platforms. Firms that are valued above Rs 4,000 crore will list on the mainboard platform.
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SEBI further proposed an average annual operating profit of Rs 3 crore for SME IPOs. Loss-making firms may list on platforms if 75% of net offer goes to qualified institutional buyers.
The regulatory body also proposed scrapping compulsory 100% underwriting for SME IPOs. The SME IPOs will now require 90% subscription or refund within four days. SEBI's other proposals included scrapping mandatory three-year market making as well as one-share trading lots for SME stocks as well as cutting the minimum SME IPO application size to Rs. 1 lakh, while raising the minimum SME IPO allottees to 500 from 200.
The securities regulating agency also proposed scrapping Rs.10 crore cap on corporate-purpose funds.
This development comes after SEBI extended the deadline for IPO issue-size relaxation to March 31, 2027, according to a letter from the market regulator to Association of Investment Bankers of India (AIBI) seen by NDTV Profit.
In April, SEBI raised the permissible issue-size revision to 50% without fresh draft red herring prospectus (DRHP) filing. Companies can increase or decrease fresh issue size by up to 50% without filing a fresh draft offer document.
The relaxation came in response to representations from the industry, highlighting challenges in raising capital amid subdued investor participation. Geopolitical tensions in the Middle East have been cited as a key factor weighing on market sentiment and affecting issuers' ability to accurately gauge demand and pricing.
The regulator had originally set September 30, 2026 as the deadline for the relaxation. Now, the relief will apply to IPOs opening on or before March 31, 2027, extending a meaningful window for companies planning to tap the markets.
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