SME IPO launches dry up amid stock market volatility

AHMEDABAD: Volatile equity markets have adversely affected launches of initial public offerings (IPOs) by small and medium enterprises (SMEs). The number of

SME

IPOs launched so far in 2019 have dwindled to 10 as against 32 in the same period in 2018.


The cumulative funds mopped up through SME IPOs have also plummeted substantially to Rs 155 crore in the first two and a half months of 2019 from Rs 573 crore during the same months in 2018, show data compiled by Pantomath Advisory Services Group.

As far as

Gujarat

is concerned, the state managed to churn out only four SME IPOs with a cumulative mop-up of Rs 88 crore. In 2018, the state had seen launches of 10 offerings with collections of Rs 114 crore till mid-March.

“The current market scenario and corrections in prices of mid cap and small cap stocks have resulted in lesser interest in SME IPOs,” said Mahavir Lunawat, managing director, Pantomath Advisory Services Group, which has managed several SME IPOs. “Several mid and small cap or even some large cap stocks are available at attractive valuations. Investors may not prefer SME stocks at a time when shares on mainboard are available at such affordable levels,” he added.

Number of IPOs from SMEs has come down

It may be mentioned here that hundreds of shares on the bourses hit their 52-week low levels when markets corrected sharply in January and February.

“Many initial public offerings (IPOs) by SMEs were either discounted or under-subscribed. Also, several IPOs launched previously were priced at higher valuation. As a result, the number of SME IPOs have come down,” said Nilesh Kotak, a city-based stock analyst.

According to Pantomath, three SME IPOs are currently going on and two more will come up for subscription next week.

As many as 143 SME IPOs came to the market in 2018 and Rs 2,406 crore were collected, which was higher than Rs 1,738 crore raised from 133 offers in 2017.