Taking a company public is a defining step in its growth journey — a move that enhances credibility, brings visibility, and provides access to new sources of capital. In India, businesses looking to go public have two distinct routes: the Mainboard IPO and the SME IPO.
While both serve the same purpose — raising funds from the public — they differ significantly in terms of eligibility, process, cost, compliance, and investor base. Understanding these differences is essential for promoters, CFOs, and business owners to choose the right platform for their company’s growth stage.
1. Understanding Mainboard and SME IPOs
Mainboard IPOs are meant for large, well-established companies that meet higher eligibility and disclosure requirements. These IPOs are listed on the primary segments of India’s leading stock exchanges — NSE and BSE — and are open to institutional as well as retail investors.
SME IPOs, on the other hand, are designed for Small and Medium Enterprises (SMEs) that may not yet meet the eligibility standards of the mainboard but are ready to tap the capital markets for expansion. SME listings take place on separate platforms — NSE Emerge and BSE SME — created to help smaller companies access public funds through a simplified regulatory framework.
2. Eligibility Criteria
The first and most critical difference lies in eligibility requirements.
| Parameter | Mainboard IPO | SME IPO |
| Post-Issue Paid-Up Capital | More than ₹10 crore | Up to ₹25 crore |
| Track Record | Minimum 3 years of profitability and net tangible assets | 2–3 years of operations (profit track record preferred, but not always mandatory) |
| Net Worth & Profitability | Strong financial history required | Relatively flexible criteria |
| Number of Shareholders (Post-Issue) | Minimum 1,000 | Minimum 50 |
| Corporate Governance | Strict SEBI norms, independent directors, committees | Relatively simplified governance structure |
SME platforms were specifically designed to make it easier for smaller, growing enterprises to raise funds without facing the same compliance burden as large corporations.
3. Regulatory and Approval Process
The Mainboard IPO process is governed and vetted by SEBI (Securities and Exchange Board of India) in detail. Companies must file a Draft Red Herring Prospectus (DRHP) with SEBI, undergo comprehensive scrutiny, and receive approval before proceeding.
In contrast, SME IPOs are regulated by SEBI but the vetting process is handled by the respective stock exchange (BSE/NSE). This makes the process faster and less cumbersome while maintaining regulatory oversight.
Key difference:
- Mainboard IPO → SEBI approval mandatory.
- SME IPO → Exchange approval sufficient.
4. Issue Size and Investor Base
- Mainboard IPOs involve larger issue sizes — often ₹100 crore or more — and attract a wide pool of investors, including Qualified Institutional Buyers (QIBs), Foreign Institutional Investors (FIIs), Mutual Funds, and Retail Investors.
- SME IPOs are typically smaller in size, ranging between ₹5 crore to ₹50 crore, and primarily target retail investors and high-net-worth individuals (HNIs). Institutional participation is limited.
The higher visibility of mainboard IPOs results in broader investor interest and higher liquidity post-listing, while SME IPOs tend to have a more focused investor base.
5. Pricing and Allotment Structure
Mainboard IPOs often use the book-building method, where a price band is announced and investors bid within that range to determine the final price based on demand.
SME IPOs, in contrast, typically follow a fixed-price mechanism — a pre-determined offer price is set, and investors apply accordingly.
Retail lot sizes also differ:
- Mainboard IPO: Usually small lots of ₹10,000–₹15,000 per application.
- SME IPO: Larger lots (₹1–₹2 lakh per application) to ensure serious participation and manageable shareholder numbers.
6. Listing Requirements and Market Maker Role
A unique feature of SME IPOs is the mandatory market maker system. Every SME issuer must appoint a registered market maker to provide buy/sell quotes for a minimum of three years post-listing. This ensures liquidity in the SME segment, where trading volumes are typically lower.
Mainboard IPOs have no such requirement, as liquidity is naturally driven by institutional and retail activity.
7. Cost and Time of Listing
Mainboard IPOs involve higher costs due to larger issue sizes, extended regulatory processes, multiple intermediaries, and nationwide marketing campaigns.
SME IPOs are comparatively cost-effective and faster to execute.
| Parameter | Mainboard IPO | SME IPO |
| Approximate Timeline | 4–6 months | 2–4 months |
| Cost of Issue | ₹2–5 crore (depending on size) | ₹25–75 lakh (depending on issue size) |
| Approvals Required | SEBI, Exchanges, ROC | Exchange-led vetting, ROC |
For companies seeking quicker access to funds, the SME route is often preferred, especially when time-to-market is crucial.
8. Post-Listing Obligations
Once listed, both Mainboard and SME companies must comply with periodic disclosure and corporate governance norms. However, the obligations are more stringent for mainboard entities.
Mainboard Post-Listing Requirements:
- Quarterly results under Ind-AS
- Detailed disclosures on shareholding, financials, and related-party transactions
- Compliance with SEBI (LODR) Regulations
SME Post-Listing Requirements:
- Semi-annual reporting
- Simplified disclosure format
- Market maker to maintain liquidity
As companies grow, they may voluntarily enhance their governance systems to prepare for migration to the mainboard.
9. Migration from SME to Mainboard
A key advantage of SME listing is the ability to migrate to the mainboard once the company achieves the required scale and financial strength.
Conditions for Migration:
- Paid-up capital exceeding ₹10 crore post-migration.
- Minimum 2 years of listing on the SME platform.
- Approval from shareholders via special resolution.
- Fulfilment of mainboard eligibility norms.
Migration allows SMEs to access larger pools of investors and achieve higher liquidity, making it a natural next step in their capital market journey.
10. Liquidity and Investor Confidence
Liquidity tends to be significantly higher on the mainboard, supported by a wider investor base, research coverage, and institutional participation. SME stocks may experience limited trading activity, particularly in the early months after listing.
However, over time, strong-performing SME-listed companies can attract significant attention, improving liquidity and market perception.
11. Which Route Should a Company Choose?
The choice between Mainboard and SME IPO depends on several factors:
- Company size and capital needs: Smaller companies with modest funding goals often prefer SME IPOs, while larger enterprises opt for mainboard listings.
- Readiness and compliance maturity: Companies with robust systems, governance, and brand recognition are better suited for the mainboard.
- Investor outreach: Mainboard offers broader visibility, while SME provides niche access.
- Timeline and cost considerations: SME IPOs are faster and more economical for early-stage growth companies.
In simple terms:
- SME IPO = Gateway for growing enterprises to raise funds and gain visibility.
- Mainboard IPO = Platform for mature businesses aiming for large-scale capital and national recognition.
12. Key Takeaways
| Aspect | Mainboard IPO | SME IPO |
| Listing Platform | NSE / BSE Mainboard | NSE Emerge / BSE SME |
| Target Companies | Large, established | Small & medium enterprises |
| Regulatory Oversight | SEBI approval | Exchange approval |
| Market Maker Requirement | Not required | Mandatory |
| Investor Base | Institutional + Retail | Retail + HNI |
| Disclosure Norms | Comprehensive | Simplified |
| Migration Option | N/A | Can migrate after 2 years |
| Timeline | 4–6 months | 2–4 months |
| Approx. Cost | ₹2–5 crore | ₹25–75 lakh |
Conclusion
Both Mainboard IPOs and SME IPOs play vital roles in India’s capital markets. The SME platform acts as an incubator for emerging businesses, helping them build public track records and investor confidence. The mainboard, on the other hand, represents scale, stability, and wider investor participation.
For promoters and CFOs, the decision isn’t just about compliance — it’s about aligning the company’s current financial strength, governance structure, and future ambitions with the right platform.
A well-planned listing — whether on the SME or mainboard exchange — can unlock immense opportunities for growth, visibility, and long-term value creation.
