The SME IPO segment is specifically for the companies who have less capital or are smaller in size. The SME board’s full form refers to Small and Medium Size Enterprises. These companies should have a minimum capital post issue time frame of 1 Crore Rs. The same can extend upto 25 Crore Rs. Thus the range bound for IPO launch in SME board is 1 Crore Rs. – 25 Crore Rs. The companies in this segment are listed on BSE and NSE but in different segments than the main board. They are listed on NSE Emerge and BSE SME platforms.
NSE Emerge and BSE SME facilitate the entire IPO procedure for SME Market. The IPOs in this segment are traded in a bit different manner. In Normal conditions we place buying and selling orders of desired quantities and they get executed in market hours. However in this format the orders can only be placed in the form of Fixed Lot sizes. This means that one has to opt for the lot size decided by the company based on its price band. Also here the price band of the company decides its lot size.
The lot sizes are presented in the below manner :-
If the price band of a company is upto 14 Rs per share then the lot size is equal to 10000 Shares. If the price band of the share ranges from Rs. 14 to Rs. 18 then the lot size is equal to 8000 Shares. When the price is between Rs. 18 to Rs. 25 then the lot size is equlavatemt to 6000 Shares. If the price band of a company is from 25 Rs per share to Rs. 35 per share the lot size is equal to 4000 Shares. When the price of the shares is between the range of Rs. 35 to Rs. 50 then the lot size is equivalent to 3000 Shares. If the price band of a company is from 50 Rs per share to Rs. 70 per share the lot size is equal to 2000 Shares.
Above 70 Rs.
Extending the tally further if the price ranges from Rs. 70 to Rs. 90 then the lot size gets cut down to 1600 Shares. However when the price increases from Rs. 90 to Rs. 120 then the lot size is equal to 1200 Shares. From a price range of Rs. 120 to Rs. 150 the lot size of the shares is 1000. With the range extending to Rs. 150 – 180 the lot size decreases to 800 shares.
Above 180 Rs.
From Rs. 180 to Rs 250 the lot size is 600 shares. The price range of Rs. 250 to Rs. 350 is limited to 400 shares in one lot. If the price band of a company is from 500 Rs per share to Rs. 600 per share the lot size is equal to 240 Shares. However with a price range of Rs. 600 to Rs 750 the lot size further decreased to 200 shares.
In the final two rounds a share’s price range between Rs. 750 to Rs.1000 leads it to a lot size of 160 shares. Any share above the price of Rs. 1000 has a lot size of 100 Shares.
The trading in such segments occurs in two parts. One is the Trade to Trade settlement and the other one is known as Rolling Settlement. However the segment is further extended to the odd lot segment but it is not much utilized.
In the first two types if the share is listed under SM Series then its cycle for trade is T+2. This series’s trades if executed on Wednesday will be settled on Friday. This does not include the holidays. Hence working days are calculated in it.
With trade to trade settlement cycle, every settlement happens on a trade to trade basis and netting off is not allowed. The shares under ST series are included here.
Odd lot segment is referred to when a bid is placed outside of lot size determined by the NSE and BSE. The size bid is less than the minimum lot size in this segment. Such trades are recorded in a separate window provided by the NSE and BSE however at the end the same number of bidding lot sizes gets first priority.
The SME market targets the companies which require funding and capital for further growth. Hence to get capital without any interest this is the best way for them. IPO preparation in this type takes normally 2 to 3 months.
The timings for IPO subscription are normally 3 days only. The market hours begin and end in a similar manner to the mainboard IPO. However the bulk deal time frame is from 8:45 A.M. to 9:00 A.M. and from 02:05 P.M. TO 02:20 P.M. Some shares in the SME board also provide bumper listing opportunities. The current SME IPOs ongoing are Maruti Interior Products Limited, Richa Info Systems IPO and Vaidya Sane Ayurved Laboratories Limited IPO.