SME IPO process in India, step by step

An SME IPO (initial public offer on the SME platform of BSE or NSE) moves through six stages. The timings below are typical ranges, not promises. Each company is different, and some stages depend on people outside the company.

1. Decision and readiness check. Typically 1 to 2 months.
2. Preparation. Typically 6 to 18 months, depending on the state of the records.
3. Appointing the merchant banker and the team. Often overlaps with preparation.
4. Due diligence and the draft offer document. Typically 2 to 4 months.
5. Exchange review. At least 21 days of public comments, then queries. Typically 2 to 4 months in all, and outside the company's control.
6. Issue and listing. Typically 3 to 6 weeks from the final document to listing day.

For a company whose books and records need work, 12 to 24 months from decision to listing is a fair expectation. A company that is already well organised can move faster. Most of the time a promoter can save is in stage 2, before anything is filed.

The company decides whether to list, when, and how much to raise. The board and the shareholders approve it. Before that decision, it helps to test the company against the rules honestly.

• Eligibility. Today the main SEBI test is operating profit (EBITDA, earnings before interest, depreciation and tax) of at least Rs 1 crore in at least two of the last three financial years. Each exchange adds its own tests on net worth, track record and cash flows.
• Size. The SME route is for companies whose paid-up capital after the issue is up to Rs 25 crore.
• Purpose. The money must go to specific, supported uses. It cannot be used to repay loans from promoters, the promoter group or related parties.

If a test is not met today, that is not the end. It tells you what to work on first.

This is where most delays begin, and where most time can be saved. The company, its accounts team, its statutory auditor and its company secretary do most of the work.

• Company form. A private limited company converts to a public limited company. A firm or LLP that became a company needs at least one full financial year as a company before filing.
• Restated financial statements. Three years of accounts, restated (re-presented on one consistent basis for the offer document). They are examined by an auditor holding a valid peer review certificate from ICAI (the Institute of Chartered Accountants of India).
• Share capital records. Every allotment and transfer since incorporation, with the matching ROC (Registrar of Companies) filings.
• Board. Independent directors, a woman director and an audit committee. A company secretary acts as compliance officer.
• Clean-up. Property title, related-party dealings, pending cases, tax notices and statutory dues.
• Key numbers. KPIs (key performance indicators) defined and tracked with evidence.

Firms such as Mansukhbhai work on the promoter's side at this stage, so that the file is in order before the merchant banker opens it. Our IPO readiness checklist guide lists each item.

Every SME IPO is managed by a SEBI-registered merchant banker (also called the lead manager) appointed by the company. The merchant banker is the company's partner through the process. Around it, each party has a defined role.

• The company and promoters. Decide the size and purpose of the issue, provide information and documents, and sign the offer document. They are responsible for what it says.
• Merchant banker. Carries out due diligence, drafts and files the offer document, visits the company's sites, coordinates the other parties and gives a due diligence certificate to the exchange.
• Statutory auditor. Reports on the restated financial statements and certifies figures, including KPIs.
• Legal counsel. Carries out legal due diligence on title, licences, contracts and cases.
• RTA (registrar and share transfer agent). Handles applications, the basis of allotment and credit of shares.
• Underwriter. Every SME issue is fully underwritten today, and the merchant banker must underwrite at least 15% itself.
• Market maker. An exchange member who quotes buy and sell prices in the shares for at least three years after listing.
• The exchange (BSE SME or NSE Emerge). Reviews the draft offer document, raises queries, gives in-principle approval and grants listing.
• SEBI. Makes the rules. For SME issues, the draft is filed with the exchange, not reviewed by SEBI for observations as on the Main Board. Copies of the offer documents are also given to SEBI.

The merchant banker and legal counsel check every statement against a document. The result is the DRHP (draft red herring prospectus, the first draft of the offer document) or, for a fixed-price issue, the draft prospectus.

It covers the business, industry, promoters and group companies, restated financials, KPIs, risks, pending cases, the objects of the issue and the basis for the price. Since 2025 it must also give details of provident fund and ESI (employees' state insurance) payments, the merchant banker's site visit report and all fees paid to the merchant bankers.

Typical time: 2 to 4 months. It is shorter when documents arrive complete and on time, and longer when gaps are found during checking.

• The draft is filed with the SME exchange, with the merchant banker's due diligence certificate and site visit report.
• Within two working days of filing, a public announcement is made. The draft stays open to the public for comments for at least 21 days.
• The exchange raises queries. The company and the merchant banker answer them, often with supporting documents.
• When satisfied, the exchange gives in-principle approval.

Typical time: 2 to 4 months, sometimes more. The pace of review is not in the company's hands. What is in its hands is how fast and how completely it answers.

• The RHP (red herring prospectus, the final document without the final price) or prospectus is filed with the Registrar of Companies.
• In a book-built issue, the price band is announced at least two working days before the issue opens.
• The issue stays open for at least three working days and at most ten.
• Today the minimum application is two lots, worth more than Rs 2 lakh.
• At least 200 allottees are needed for the issue to proceed to allotment.
• Shares are listed within three working days of the issue closing (T+3).

The price is set by the company and its merchant banker, guided by investor bids. SEBI and the exchange do not decide or approve the price.

• Lock-in. Promoters' minimum contribution of 20% of post-issue capital is locked in for three years. Of the promoter holding above that, half is locked in for two years and half for one year. Other pre-issue shares are locked in for one year.
• Market making continues for at least three years.
• Use of money raised. Reported to the exchange. Where the issue is above Rs 50 crore, a monitoring agency checks how the money is used.
• Results every half year, prompt disclosure of important events, and audit committee approval of related-party transactions.
• KPIs from the offer document reported at least once a year for a period after listing.

On 14 October 2026 SEBI published a consultation paper on SME IPOs. These are proposals, not rules. They include:

• Deciding the platform by market value after the issue (up to Rs 1,000 crore on the SME platform) instead of paid-up capital.
• A profit test of average operating profit of Rs 3 crore a year over three years, with a route for companies that do not meet it if at least 75% of the offer goes to qualified institutional buyers.
• A minimum application of four lots of Rs 25,000 each (Rs 1 lakh).
• Removing compulsory market making and the 100% underwriting rule.
• At least 500 allottees instead of 200.

If any of these become rules, the steps above stay the same, but some tests and timings will change. Plan on today's rules and keep watching.