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SME IPOs in October- Lakshya Powertech Limited and Freshara Agro open for subscription

 Finance  |    

2024/10/17 13:15 pm


Lakshya Powertech Limited and Freshara Agro Exports are the two SME IPOs active in the Indian primary market. Five more- Premium Plast Limited IPO, OBSC Perfection Limited IPO, United Heat Transfer Limited IPO, Danish Power Limited IPOs and Usha Financial Services Limited IPO are in the fray. October already had IPOs from NeoPolitan Pizza and Foods Limited, Khyati Global Ventures Limited IPO, Shiv Texchem Limited, and Pranik Logistics Limited. Rajasthan-based company Danish Power is prospected to become the biggest IPO in the SME segment. India’s SME sector is at the heart of its development story and there has been a significant boom in the market. The BSE SME Index has seen approximately 167% yearly gain.

Lakshya Powertech Limited

Lakshya Powertech Limited is an engineering consultancy firm specializing in Mechanical and Electrical Services. The IPO bidding opened on October 16, 2024, and will run until October 18, 2024. This is a fresh issue of 27.73 lakh shares worth 49.91 crore. It will have a price band of Rs 171-180 per share with a minimum lot size of 800 shares. The minimum lot size for high-net-worth Investors is 2 lots.

The purpose of this issue is to pay the company's borrowings and generate funds for the company's working capital requirements.

Freshara Agro Exports Limited

Freshara is a food technology firm, that procures, processes and exports preserved Gherkins and other pickled goods from India to various countries. This is a fresh issue of 64.99 lakh shares worth 75.39 crores. The IPO is opening today and will be available for subscription till October 21, 2024. It will have a price band of Rs 110- 116 per share with a minimum lot size of 1200 shares. The minimum investment requirement for retail investors is Rs 1,39,200 and the minimum investment requirement for high-net-worth investors is Rs.2,78,400.

The purpose of this issue is to generate funding for capital expenditure, funding the working capital requirement of the company.

Surge in SME IPOs

SME IPOs are creating a frenzy among retail investors in the primary market. Euphoric retail investors with the hope of instantaneous gain engage with the primary market very carelessly. According to data from NSE, 80 companies were listed on the NSE Emerge between April and August. Over the years 555 companies have raised Rs 13,988 crore on the NSE emerge, similarly in the BSE SME platform, 525 companies have raised Rs 7,243 crore.  Due to the high liquidity of the primary market retail investors are flocking in to subscribe to SME IPOs. Around 6 oversubscribed SME IPOs of 2024 have raised over Rs 65000 crore compared to the targeted Rs.59.3 crore. For example, Resourceful Automobile, with eight employees and a couple of showrooms raised over Rs 4800 crore compared to the targeted Rs 12 crore.

There have been several red flags raised by SEBI about the risk and over-speculative nature of the SME IPOs.

“Post listing, some of the SME companies and/or their promoters have been seen to make public announcements that create a positive picture of their operations. These announcements are typically followed up with various corporate actions such as bonus issues, stock splits and preferential allotments,” SEBI stated in a note.

SEBI has announced that it will toughen regulations around SME IPOs. NSE has already raised the bar and will continue to do so to reduce speculation in SME IPOs. “We will maintain the balance, and a stricter guideline is expected. Not all SMEs are doing good,” said Ashishkumar Chauhan, MD & CEO of the National Stock Exchange.

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