What lies ahead for SME IPOs after SEBI remarks on price manipulation? Experts weigh in
Initial public offering (IPO) stocks of small and medium-sized enterprises (SME) have been under selling pressure this week after Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch made remarks of price manipulation in the segment earlier this week. The S&P BSE SME IPO index has lost around eight per cent this week. However market experts believe that SME IPOs have been resilient despite market volatility in the long run.
‘’While SEBI has raised concerns about potential price manipulation in the SME segment, it’s important to not lose sight of the positives that this sector offers. SME Capital markets represent an important opportunity for smaller companies to access equity capital, a critical resource that was previously challenging to secure,” said Manick Wadhwa, Director at SKI Capital.
‘’These enterprises, despite their smaller IPO sizes, have shown resilience and potential, with several noteworthy companies making successful debuts on SME exchanges. While the smaller size of SME IPOs does make these companies more susceptible to market manipulation, it’s crucial to highlight the broader context of opportunity and growth,” added Wadhwa
Recognizing the importance of transparency and investor protection, the SME exchanges have proactively enhanced disclosure norms in the offer documents, according to the market expert. Investors, therefore, should maintain confidence in the potential of high-quality SMEs, viewing them as valuable components of a diversified investment portfolio, despite the inherent risks associated with their smaller scale, suggested Wadhwa.
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Published: 13 Mar 2024, 05:51 PM IST
Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.