The Indian equity market has seen massive participation in SME IPOs in the last few years, thanks to strong listing gains, better transparency, and the rising confidence in small and medium enterprises. For many investors, the next big question is: How to apply for SME IPO? Even though the process is similar to mainboard IPOs, SME IPOs have unique rules related to lot size, eligibility, platforms (NSE Emerge, BSE SME), and risk factors that investors must understand.
This comprehensive guide explains how to apply for SME IPO, the eligibility, the application process, documents required, demat rules, and precautions for investing. If you are a retail investor, HNI, or a business owner planning to invest in high-growth small companies, this blog will walk you through everything in detail.
1. What Is an SME IPO?
Before understanding how to apply for SME IPO, it’s important to know what an SME IPO actually means. SME stands for Small and Medium Enterprises. These companies raise capital through stock exchanges to expand operations, improve working capital, purchase machinery, or fund new projects.
Unlike mainboard companies listed on NSE or BSE, SME companies get listed on special platforms:
NSE Emerge
BSE SME
These platforms have lighter compliance requirements compared to mainboard exchanges, making it easier for smaller companies to access capital markets. However, because these companies are smaller, SME IPOs carry higher risk but also higher potential gains.
2. Why Invest in SME IPOs?
Understanding the benefits helps investors make informed decisions before learning how to apply for SME IPO.
a. High Growth Potential
SMEs are often in the early stage of business expansion, which means their valuations can grow quickly if business performance improves.
b. Attractive Listing Gains
Recent SME IPOs have delivered strong listing premiums ranging from 50% to even 300% in some cases.
c. Lower Competition for Allotment
Mainboard IPOs get oversubscribed heavily. SME IPOs often have better allotment chances.
d. Strong Promoter Participation
Promoters usually hold a significant part of the company, which builds trust.
e. Diversification of Portfolio
SME IPOs allow investors to diversify into fast-growing niche sectors.
3. Who Can Apply for SME IPO?
Before learning how to apply for SME IPO, understand whether you are eligible.
Anyone who fulfils the following conditions can apply:
Must have a valid PAN card
Must have a Demat account
Must have a bank account with ASBA enabled facility
Must be 18 years or above
Can invest at least 1 lot, which may cost ₹1–3 lakh (lot size in SME IPOs is higher)
SME IPO minimum lot size is larger compared to mainboard IPOs. Typically:
1 lot = ₹1,00,000 to ₹2,00,000
Investors must apply in multiples of lots
4. Documents Required to Apply for SME IPO
Before moving ahead with how to apply for SME IPO, keep the following documents ready:
PAN card
Aadhaar card
Demat account number (DP ID + Client ID)
Bank account with ASBA
Mobile number linked with bank and Demat
Email ID
Net banking credentials (for online ASBA application)
5. Platforms Where SME IPOs Are Listed
To understand how to apply for SME IPO, you need to know the platforms where these IPOs get listed:
a. NSE Emerge
This is the SME platform of the National Stock Exchange, hosting hundreds of SME companies.
b. BSE SME
This is the SME platform of the Bombay Stock Exchange.
Investors can apply for SME IPOs through brokers such as:
Zerodha
Upstox
Angel One
Groww
ICICI Direct
HDFC Securities
Kotak Securities
SBI Securities
6. Step-by-Step Guide: How to Apply for SME IPO
This section is the core of the blog and answers the main question: How to apply for SME IPO?
There are three major methods to apply:
Using Net Banking (ASBA)
Using UPI through stock brokers
Offline through physical forms
Let’s break down each method.
6.1. How to Apply for SME IPO Using ASBA (Net Banking)
ASBA stands for Application Supported by Blocked Amount. This is the most secure and recommended method.
Step-by-Step Process:
Step 1: Login to Net Banking
Use your bank’s internet banking platform (SBI, HDFC, ICICI, Kotak, etc.).
Step 2: Go to IPO Section
Navigate to:
Investments → IPO → Apply IPO
Step 3: Select SME IPO
Choose the SME IPO you want to apply to.
Step 4: Enter Bidding Details
Fill in:
Number of lots
Price (Cut-off recommended)
Demat account details
Step 5: Confirm Application
Amount gets blocked in your bank account but not debited.
Step 6: Application Complete
You will receive a confirmation message.
6.2. How to Apply for SME IPO Using UPI (Through Brokers)
This is the fastest method and is widely used by retail investors.
Step 1: Login to Your Broker App
Use Zerodha, Angel One, Upstox, Groww, etc.
Step 2: Go to IPO Section
Find the SME IPO list.
Step 3: Select the IPO
Click on Apply.
Step 4: Enter Bid Details
Select:
Lot size
Cut-off price
UPI ID
Step 5: Approve UPI Mandate
Open your UPI app (PhonePe, Google Pay, Paytm) and accept the payment block request.
Step 6: Application Submitted
You will receive a confirmation from the exchange.
6.3. How to Apply for SME IPO Offline
Some investors prefer the physical method.
Step 1: Visit your broker
Step 2: Collect the physical IPO form
Step 3: Fill in PAN, Demat, and bid details
Step 4: Submit the form to the broker or bank
Step 5: Bank will block funds through ASBA
This method is rarely used today due to convenience of online applications.
7. Key Things to Keep in Mind While Applying for SME IPO
Even after knowing how to apply for SME IPO, investors must consider the following points:
a. High Lot Size
Minimum investment usually starts from ₹1 lakh.
b. Higher Risk
SME companies are small and may face business challenges.
c. Liquidity Issues
Trading volumes are often low compared to mainboard companies.
d. Check Financials Carefully
Look at:
Revenue growth
Profit margins
Promoter background
Debt levels
Sector trends
e. Read the DRHP/RHP
Red Herring Prospectus contains all business details.
8. Allotment Process in SME IPOs
Once you know how to apply for SME IPO, the next step is understanding allotment.
How Allotment Works:
SME IPOs follow a proportionate allotment system
First priority is given to retail investors if the category is not oversubscribed
If oversubscribed, lottery system is applied
Funds for unallotted investors are unblocked in 2–3 days
9. How to Check SME IPO Allotment Status
Method 1: Registrar Website
Registrars include:
Link Intime
Bigshare
KFin Tech
Method 2: NSE/BSE Website
Go to the IPO allotment page and enter:
PAN
Application number
Demat details
Method 3: Broker App
Many broker apps show allotment status automatically.
10. What Happens After You Apply?
Once you understand how to apply for SME IPO, the next phase is listing.
a. Shares Credited to Demat
If allotted, shares reflect in the Demat account before listing.
b. Listing Day Trading
Investors can:
Sell on listing day
Hold for long-term gains
c. Track Market Depth
Liquidity is lower in SME stocks, so plan your exit carefully.
11. Should You Apply for SME IPOs? Pros and Cons
Understanding how to apply for SME IPO is good, but knowing whether to apply is equally important.
Pros
High listing gains
Strong growth potential
Better allotment chances
Low competition
Cons
High risk
Large minimum investment
Lower liquidity
Higher volatility
Always balance risk with research.
12. Tips for Successful SME IPO Investing
Here are expert tips beyond “how to apply for SME IPO”:
✔ Choose companies with strong fundamentals
✔ Avoid IPOs with very high valuations
✔ Look for companies with strong promoter background
✔ Check utilisation of IPO proceeds
✔ Study market reputation of the merchant banker
✔ Diversify across sectors
13. Final Thoughts
Understanding how to apply for SME IPO is now simple with online platforms, UPI, and ASBA systems. SME IPOs offer excellent opportunities for investors seeking high growth and strong returns. However, investors must analyze the fundamentals, valuations, and risks involved.
Whether you are a new investor or an experienced one, knowing how to apply for SME IPO gives you an edge in capturing early-stage growth opportunities in India’s booming SME sector.