Author(s): Meenu Goyal¹, Dr. Rishi Chaudhry²

Abstract:

The study examines the short-term performance of small and medium enterprise (SME) initial public offerings (IPOs) listed on the BSE SME platform during 2019–2023. The study measures initial returns and initial excess returns to measure the extent of under-pricing on the listing-day of SME IPOs, by using a sample of 154 companies. In the study, year-wise patterns are examined to assess changes in the number of IPOs, capital raised and average under-pricing across the study period. The study finds that, on the average, there is a significant positive return on the listing day in SME IPOs, with an average initial return of 20.76% and an average initial excess return of 18.04% for the overall time. It is observed that IPOs are initially under-priced. The level of under-pricing is fluctuating over the years, with the lowest return of 47.50% in 2020 during the COVID-19 pandemic and the highest return of 125.65% seen in 2021. It indicates investor’s confidence after recovery of markets in the post-pandemic period. The study also highlights a significant growth in SME IPO activity, both in terms of number of issues of SME IPO and total capital raised. The conclusion of the study has vital implications for investors, policymakers and issuers seeking to promote transparency, pricing efficiencies and accessibility of India’s SME IPO markets.

Keywords:

SME IPOs, Listing Day Return, Under-pricing, BSE SME, Initial Performance.

DOI: 10.61165/sk.publisher.v13i3.1

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Short Term Performance of SME IPOs listed on the BSE platform: A Five-Year Analysis (2019-23)

Pages:01-09