Mainboard IPO vs SME IPO – Simple Explanation for Investors

When a company wants to raise money from the public, it launches an IPO.In India, IPOs are mainly of two types:

1. Mainboard IPO

2. SME IPO

Let us understand both, with special focus on SME IPO.

What is a Mainboard IPO?

Mainboard IPO is for large and well-known companies.

These companies usually have:

• Big business size

• Strong brand

• Long track record

Mainboard IPOs are listed on NSE or BSE main exchange.

Main features:

• Higher issue size

• Easy buying and selling

• Better liquidity

• Lower risk compared to SME IPO

Mainboard IPOs are suitable for most retail investors.

What is an SME IPO?

SME IPO is for small and growing companies.

These companies want money to:

• Expand business

• Buy machines

• Increase working capital

SME IPOs are listed on:

• NSE SME

• BSE SME

Key Features of SME IPO-

• Small issue size, mostly below ₹100 crore

• Fixed lot size (you must apply for full lot)

• Higher investment amount per application

• Low liquidity after listing

• Market makers are present, but liquidity is still limited

Why SME IPOs Look Attractive?

Many SME IPOs show:

• High GMP

• Big listing gains

• Fast price movement

This creates excitement among investors.

But high return always comes with high risk.

Major Risks in SME IPO

• Small business risk

• Limited public information

• Difficult exit after listing

• Price manipulation risk

Liquidity risk is the biggest concern in SME IPOs.

Who Should Invest in SME IPO?

SME IPO is suitable only if:

• You understand high risk

• You invest small capital

• You can hold for long term

SME IPO is not suitable if:

• You want safety

• You need quick exit

• You invest full savings

Final Summary

SME IPOs can give high returns, but losses can also be big.

Do not invest just because of GMP or hype.

Understand the business. Know the risks. Invest with discipline.

Slow and steady investing builds real wealth.