Esconet Technologies, a leading IT solutions provider and manufacturer of high-performance computing systems, has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for listing on the NSE SME platform. The company plans to raise funds through an initial public offering (IPO) and aims to utilize the proceeds to meet its long-term working capital needs and strengthen its subsidiary’s infrastructure. The filing of the DRHP marks an important step towards Esconet Technologies’ listing and highlights the growing interest in SME IPOs in India.
SME IPO Performance in 2023:
The year 2023 witnessed a record-breaking year for SME IPOs in India, with 179 companies listing on the stock market. Many of these IPOs were oversubscribed and saw substantial gains in value after listing. Top-performing SME IPOs in 2023 included RBM Infracon, Gayatri Rubbers & Chemicals, and others. While this surge in SME IPOs has been impressive, experts have differing opinions on the sustainability of this trend in 2024.
Factors Driving the SME IPO Segment in 2023:
The success of the primary market, coupled with the positive sentiment in the secondary market, played a significant role in driving the interest in SME IPOs. Most of the issues were oversubscribed by a large margin, resulting in significant listing gains. Additionally, the proportionate basis of allotment and higher valuations compared to similar companies on the mainboard attracted investors. However, experts raise concerns about the sustainability of the SME IPO boom due to potential issues surrounding under-regulation and valuation discrepancies.
Expert Opinions on the Sustainability of the SME IPO Boom:
- Mohit Gulati, CIO & Managing Partner of ITI Growth Opportunities Fund, expresses concerns about the under-regulation in the SME IPO space, emphasizing the need for better monitoring and addressing placement commission practices.
- Shailesh Saraf, smallcase Manager & MD of Dynamic Equities Pvt Ltd, highlights the positive impact of SME IPOs on economic participation, but also acknowledges the need for ongoing legislative support and credit availability to sustain the growth of the sector.
- Mahesh M. Ojha, AVP – Research & Business Development at Hensex Securities Pvt Ltd, believes that while SME IPOs have contributed significantly in 2023, doubts and suspicions around certain activities may impact the sustainability of the boom in the coming years.
- Vivek Goel, Managing Partner at Tailwind Capital Advisors, expects the SME IPO boom to continue in the next year due to optimistic market sentiments and the role of SMEs in India’s economic growth. He emphasizes the potential for equity investments in Indian SMEs to meet the growing credit needs and drive value creation.
1. What has Esconet Technologies filed with SEBI?
Esconet Technologies has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for listing on the NSE SME platform.
2. How does the SME IPO segment perform in 2023?
2023 saw a record-breaking year for SME IPOs in India, with 179 companies listing on the stock market. Many of these IPOs were oversubscribed and saw substantial gains in value after listing.
3. What factors drove the SME IPO segment in 2023?
The success of the primary market, coupled with positive sentiment in the secondary market, contributed to the interest in SME IPOs. Oversubscription, proportionate basis of allotment, and higher valuations compared to similar companies on the mainboard were key factors.
4. Are experts optimistic about the sustainability of the SME IPO boom?
Experts have mixed opinions on the sustainability of the SME IPO boom in 2024. While some believe in its continuation, others express concerns about under-regulation, valuation discrepancies, and potential issues with certain IPOs.
5. How do experts suggest addressing the challenges in the SME IPO segment?
Experts recommend better monitoring and regulation in the SME IPO space, addressing placement commission practices, ensuring ongoing legislative support and credit availability, and promoting equity investments to support SME growth and value creation.
Esconet Technologies’ filing of the DRHP with SEBI for an NSE SME listing reflects the growing interest in SME IPOs in India. The performance of SME IPOs in 2023 has been impressive, but experts have different views on the sustainability of this trend in the coming years. Addressing challenges such as under-regulation and valuation discrepancies will be crucial for the long-term success of the SME IPO segment.