SEBI is proposing sweeping changes to the framework for SME IPOs, including raising eligibility requirements tied to profits and shifting the focus from paid-up capital to post-issue market capitalisation. The proposals also include updated norms on valuation and how SME issues are structured and exited after listing.
According to outlets, SEBI would require an average annual operating profit of ₹3 crore, based on the preceding three financial years. This would replace or substantially raise the current baseline, which is described as ₹1 crore in at least two of the previous three years. SEBI is also considering a market-cap threshold of around ₹1,000 crore for SME IPO eligibility, as an alternative to existing criteria.
While reporting differs on the emphasis of specific mechanics, all accounts point to the same direction: tougher financial eligibility, a market-cap-based approach for determining SME IPO eligibility, and easing certain post-IPO exit-related rules. SEBI’s proposals are intended to tighten entry standards for SME fundraising and standardise eligibility using more market-linked measures.
