Small and Medium Enterprise (SME) IPOs have recently garnered significant attention due to their spectacular listing gains, sometimes exceeding 100% on day one. However, the associated risks are equally high.
Liquidity and Lot Size
Unlike Mainboard IPOs, SME IPOs typically have a larger minimum investment size (often around ₹1 Lakh to ₹1.5 Lakhs) and lower liquidity post-listing. This means selling shares might be difficult if demand dries up.
Volatility
Due to the smaller issue size, SME IPO prices can be highly volatile and susceptible to manipulation by large operators. Retail investors should exercise caution and thoroughly research the fundamentals before applying.