Is SME Market Worth The Hype?

SME IPO Market

This review examines SME IPO counts, listing-day gains, returns from the IPO price and listing price, and performance by sector. Its central finding is that a strong debut does not by itself indicate strong subsequent returns: the annual results and sector outcomes are widely dispersed, while long-term gains are concentrated among a minority of companies.

Key Findings

• More IPOs and variable listing gains: The annual count rose from 56 SME IPOs in CY2021 to 268 in CY2025. Average listing-day gains ranged from 12% in CY2025 to 60% in CY2024.
• Listing price returns diverged from IPO price returns: Average XIRR from IPO price was 20% in CY2024, while average XIRR from listing price was (10%). In CY2025, the reported 15% and 0.4% figures are marked as average absolute returns, not XIRR.
• Listing-day outcomes covered a broad range: In CY2024, 19% of SME IPOs recorded listing-day close gains of 75% to 100% and 18% recorded gains of 100% & above. In CY2025, 33% fell in the -25% to 0% range, while 3% recorded gains of 100% & above.
• Average listing gains across sectors: The report states that the average listing gain over the past 5 years was ~33% across 53 sectors. It classifies 40% of sectors as above-average for listing-day gains, 53% as positive but below average, and 8% as negative.
• A small group led longer-term sector returns: The report names Aerospace & Defense, Personal Products, Healthcare Equipment & Supplies, and Industrial Manufacturing as sectoral winners over the long term. It defines outliers as companies delivering 30%+ long-term returns post listing day gains.

Annual SME IPO Returns

Sector Performance and Outliers

The sector comparison separates average listing-day gains and returns from the listing price from the results of outlier companies. The following sectors are among those the report identifies as long-term winners.

Risks in SME IPO Investing

• Returns after listing: The annual comparison shows weaker average results from the listing price than from the IPO price in some years, including (10%) average XIRR from listing price in CY2024.
• Wide variation in listing-day gains: The return ranges differ across years, and the report describes listing-day returns as variable and the SME IPO market as experiencing excessive froth.
• Outlier concentration: The sector analysis indicates that long-term returns are not evenly distributed: only a portion of companies in many sectors qualify as outliers under the report’s definition.
• Listing gains and subsequent returns: The report states that post-listing-day gains set a return ceiling, underscoring the relevance of both entry and exit discipline.

Our View

The report does not recommend excluding SME companies from an investor’s wish list, but its performance analysis highlights uneven outcomes and a strong outlier effect. It emphasizes portfolio construction, a basket approach, and exit discipline, while noting that listing-day gains can limit subsequent returns.

Standard disclosures

• Research Analyst has served as an officer, director or employee of subject company(ies): No
• We or our associates have received compensation from the subject company(ies) in the past 12 months: No
• We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past12 months: No
• We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months: No
• We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report: No
• We or our associates or Research Analyst or his/her relative's financial interest in the subject company(ies): No
• Nature of financial interest in subject company, if any: Nil
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Regulatory disclosures

• Minerva Capital Research Solutions is an independent investment advisory firm founded by Nishant Gupta(SEBI registration no. INH000018896).
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• For any queries or grievances: Mr. Nishant Gupta | Email: nishant.gupta@mcapital.in or guptanishant.iimi@gmail.com | Contact Number: 8171433387 | Website: www.mcapital.in | Twitter: @Mcapital_In