First Half of F.Y. 2016-17 has been proved out to be a whopping period for SME Capital Markets. In 6 months, Indian SME Bourses witnessed remarkable activities in terms of filing as well as no. of IPOs. Indian Primary Market has witnessed spectacular revival in last few months, which is not limited to large IPOs like Mahanagar Gas or Quess Corp. ICICI Prudential, Public share sales of smaller companies on the dedicated SME boards of stock exchanges, too, have been on a hot streak. SME Exchange has enabled entrepreneurs raise equity capital for expansion and actuation.
The number of SME IPOs in First Half of 2016-17 was 42, as compared to 27 IPOs in First Half of the previous year. Moreover, the number of companies that filed the draft offer document increased from 27 in the first six months of F.Y. 2015-16 to 54 in the F.Y. 2016-17.
Importantly, the number of companies that filed their draft prospectus as also that getting listed on SME bourses is increasing every year and that trend is expected to continue in the year 2016-17 as well.
SMEs collectively raised Rs. 390 Crores during the first half of F.Y. 2016-17 as compared to Rs. 182 Crores during first half of F.Y. 2015-16. Notably, average IPO size during year 2016-17 is increased to Rs. 9.3 Crores as compared to Rs. 6.74 Crores during the previous year. Pantomath Capital Advisors (P) Ltd. Lead managed highest number of IPOs representing close to 30% of the total IPOs during 2016-17.
On average, SME indices reflected nominal returns. However, various SME stocks jumped handsomely including Commercial Syn Bags Limited, MRSS, Patdiam, Vidli Restaurants, Suyog Telematics, Ashapura Intimates etc. (On random , based on past price performance. No futuristic interpretation or investment advice is construed). Pantomath SMEX-30 increased by 40% during the year April-September, 2016. Notably, Pantomath SMEX-30 has increased more than 272.65% during last 4 years approximately.
Year 2016-17 witnessed increased participation from companies in manufacturing sector. The number of companies engaged in other sectors remained almost same as before. However, there was no IPO from a NBFC reason being tightened norms of BSE for finance companies.
Geographically, SME bourses witnessed increasing dominance of SMEs of Gujarat in these 6 months. Out of 42 IPOs, 17 IPOs were from Gujarat, where as Rajasthan and Maharashtra shared second place with 6 IPOs each. It is to be noted that Rajasthan proved out to be emerging destination for SME IPOs in this period.
City-wise, Ahmedabad tops the list with 9 IPOs raising Rs. 102 Crores. Interestingly, SME bourses witnessed IPOs from 21 different cities. Many cities witnessed their first IPOs in this period, such as Amritsar, Bhilwara, Jamnagar, Patna etc.
Till date, 161 companies have been listed on SME Exchange of BSE (of which 18 companies got migrated to Main Board) and 31 listed on NSE Emerge (of which 1 got migrated to Main Board). These companies represent diverse industry base such as manufacturing, agriculture, aquaculture, food & processing, real estate & infrastructure, media & entertainment, IT & IT-ES, service, finance etc., based out of more than 40 cities.
The SME IPOs have received overwhelming response from investors as well. Many SME IPOs received overwhelming response from SME Capital Market. IPOs like Commercial Syn Bags Limited, Sysco Industries Limited, DRA Consultants Limited got oversubscribed for more than 7 times. Interestingly, DRA Consultants Limited got oversubscribed by 12 times, making a new high of SME IPO subscription level.
Many of these IPOs have locked remarkable returns on the first day of its launch. IPOs like Nandani Creation Limited & DRA Consultants Limited were opened with upper circuit filters on the day of its debut itself. Many SME IPOs continues to give attractive return over investment. Comsyn reached 50 per cent above its issue price within a week only. Many of IPOs received investment from Institutional investors like and brokerages including investment of Reliance Mutual Fund in Valiant Organics Limited.
24 IPOs opened for subscription, in single month of September, 2016; out of which, 12 IPOs were opened on a single day, i.e. September 30, 2016. These IPOs, raised Rs. 215 Crores from the market.
The first Half-witnessed many new milestones in SME Capital Markets. The term Further Public Offer is known in Indian Primary market from a long time now. However, till date, Indian SME Bourses has not witnessed any FPO. However, first time since its launch, a Draft Red Herring prospectus has been filed by Majestic Research Services and Solution Limited (MRSS) on September 01, 2016 for Further Public Offer proposing to raise 10 Crores via book-built SME FPO.
Another milestone event happened in this half of F.Y. 2016-17. BSE SME exchange marks the listing of 150th Company on this platform on September 14, 2016. It is overwhelming to know that BSE SME Exchange was launched on March, 2012 and it took two years to list 50 companies, 16 months to list next 50 and hardly a year to celebrate the Sesquicentennial Ceremony. This certainly reflects the increasing acceptability and widening credibility of the SME Capital Market. SME bourses have not only helped SMEs in raising funds, but also helped them built brand image.
Outlook for the second half of 2016-17 appears quite bright. A total of 57 companies have already filed their draft prospectus with the SME bourses, which are expected to get listed in due course. Increasing number of companies is expected to tap SME platforms. We could expect number of companies seeking listing to rise significantly during the year 2016-17.
Source: moneycontrol
